Is woke capitalism winning?

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Apr 26, 2022 View in browser   By Lorraine Woellert, Catherine Boudreau and Debra Kahn Presented by THE BIG IDEA Guests at watch a show in front of the Cinderella Castle at the Magic Kingdom at Walt Disney World in Lake Buena Vista, Fla. | John Raoux/(AP Photo DISNEY'S MOUSETRAP — For a while, maybe between the 2003 debut of "Queer Eye for the Straight Guy" and a doomed 2016 bathroom law in North Carolina, corporations had a free ride when it came to social issues. Companies extended benefits to lesbian and gay couples and won plaudits. They touted their environmental bona fides and won plaudits. They embraced racial and ethnic diversity and won plaudits. It was all sunshine and pride parades until employees, customers and investors started demanding proof to back up the promises — and conservatives started pushing back. Now businesses find themselves squeezed between progressive demands and point-seeking politicians who have the power to cause pain. Walt Disney Co. chose to lobby quietly against a Florida bill that would ban classroom discussions about sexual orientation or gender identity. It worked behind the scenes and refrained from public statements until late in the game, after LGBTQ employees and their allies protested that the bill would further marginalize their community. After Disney spoke up, Florida Gov. Ron DeSantis, a Republican and would-be presidential contender, doubled down. He signed the classroom bill into law, then claimed a pound of flesh, revoking tax privileges the state had granted Disney more than a half century ago. "You're a corporation based in Burbank, California, and you're going to marshal your economic might to attack the parents of my state?" DeSantis said. "We view that as a provocation, and we're going to fight back." How did we get here? Donald Trump was one tipping point. One might think that a $218 billion media behemoth with 80,000 Florida workers could call the shots in Tallahassee. But conservative backlash against environmental, social and governance issues — what the right calls woke capitalism — has become so fierce that even a mighty mouse armed with money and magic can't win. The story was different less than a decade ago, when North Carolina crumpled to outrage after it passed a law that banned transgender people from using certain bathrooms that matched their gender identity. The NBA pulled its all-star game and Bruce Springsteen canceled a concert. PayPal Holdings Inc., CoStar Group, Deutsche Bank AG and Adidas AG canceled projects or ended talks with the state. Disney will survive the GOP's wrath. Here's why. ESG principles have risen to the fore in corporate boardrooms for a simple reason: They help the bottom line. "As people trust the government and institutions less, it's become more important to them that companies take a stand on social and political challenges," said Denise Dahlhoff, senior researcher at The Conference Board. Research suggests that companies have little to lose in the court of public opinion. People are more likely to buy a brand that aligns with their values, but much less likely to boycott one that doesn't, Dahlhoff said. Last month, Citigroup said it would provide travel benefits to employees seeking abortions outside their home states "in response to changes in reproductive health care laws in certain states." The move was a response to a new Texas ban on abortions after about six weeks of pregnancy. Salesforce Inc., Uber Technologies Inc., Yelp Inc. and other employers announced similar policies. Texas Rep. Briscoe Cain , a Republican, threatened to block Citigroup from underwriting municipal bonds in the state. His argument: that the bank's responsibility is to maximize shareholder returns, not "to divert shareholder resources toward ideological causes." Citigroup is holding firm. It's nice to think that companies wear white hats because they're good guys. Google does no evil, after all, and PepsiCo. stands with protestors, right? But let's not be naive. At the end of the day, Cain is right: Executives have a legal duty to improve returns. What he's missing: Marketing to a growing population of progressive, young consumers is one obvious way to boost profits, whether the messaging is sincere or not. So when Republicans shake their fists and make threats, the end game is the same. Disney doubled down, too. It promised to ramp up LGBTQ and racial minority representation in its characters and stopped donating to Florida politicians, at least for the time being. Companies have chosen sides. There's money to be made, and they can't afford to be neutral. A message from National Grid: There Is A Better Way. National Grid is announcing our path to a fossil-free energy future. By using renewable natural gas, and green hydrogen produced from water using wind energy, we can achieve a fossil-free energy future by 2050 or earlier.   YOU TELL US GAME ON — Welcome to the Long Game, where we tell you about the latest on efforts to shape our future. We deliver data-driven storytelling, compelling interviews with industry and political leaders, and news Tuesday through Friday to keep you in the loop on sustainability. Team Sustainability is editor Greg Mott, deputy editor Debra Kahn, reporters Lorraine Woellert and Catherine Boudreau, and digital producer Jordan Wolman. Reach them at gmott@politico.com, dkahn@politico.com, lwoellert@politico.com, cboudreau@politico.com and jwolman@politico.com. Want more? Don't we all. Sign up for the Long Game. Four days a week and still free!   A message from National Grid:   SHAREHOLDER SCOREBOARD BALLOT BOX — Activist shareholders at Bank of America Corp., Citigroup Inc., Wells Fargo & Co. were disappointed this morning after investors voted against resolutions to stop fossil fuel financing and conduct racial equity and civil rights audits. Both efforts failed spectacularly at Bank of America, where the civil rights audit took an estimated 2 percent of the vote and the fossil fuel financing resolution won about 11 percent approval. At Citigroup, less than 13 percent of shareholders voted to end financing of fossil fuels. A proposal to examine how Citi policies affect the rights of Indigenous peoples also failed, with 34.3 percent of the vote. A non-discrimination audit drew less than 3 percent support. About a third of Wells Fargo shareholders supported a racial equity audit, a fairly strong showing for a shareholder proposal. Eleven percent supported a policy to end new fossil fuel financing, and 26 percent supported a report on bank policies and Indigenous peoples' rights. Activists had been optimistic, pointing to decent showings last year for racial justice audits despite opposition from proxy advisory firms Glass Lewis and Institutional Shareholder Services. Check out this preview story from Avery Ellfeldt of POLITICO's E&E News for more. Early reaction: "It's deeply disappointing that, once again, asset managers like BlackRock and Vanguard have failed to put their money where their mouth is," said Sierra Club Fossil-Free Finance Campaign Representative Adele Shraiman.   INTRODUCING DIGITAL FUTURE DAILY - OUR TECHNOLOGY NEWSLETTER, RE-IMAGINED:  Technology is always evolving, and our new tech-obsessed newsletter is too! Digital Future Daily unlocks the most important stories determining the future of technology, from Washington to Silicon Valley and innovation power centers around the world. Readers get an in-depth look at how the next wave of tech will reshape civic and political life, including activism, fundraising, lobbying and legislating. Go inside the minds of the biggest tech players, policymakers and regulators to learn how their decisions affect our lives. Don't miss out, subscribe today.     BUILDING BLOCKS Recycling trucks dump their loads of paper onto a barge that holds 600 tons in New York, Wednesday, Oct. 25, 2006. Just 16 percent of the city's residential waste is now being recycled, according to the sanitation commissioner, while the rest goes to landfills or is incinerated. (AP Photo/Seth Wenig) | Seth Wenig/AP Photo WASTE NOT — New York City is backsliding on its ambitious waste-reduction goals. Residents are recycling at their lowest level since 2015. Composting food scraps — one-third of household waste — is becoming harder after the program was targeted with budget cuts. And reforms to the private-sector industry that collects commercial waste have been delayed once again. Mayor Eric Adams is confronting a growing waste crisis he inherited, and there's no end in sight: He increased the budget for street-sweeping last week by $11 million and launched a $1.3 million pilot program to get black trash bags off sidewalks and into tidy containers. But he faces an uphill battle. "To be straightforward, zero waste by 2030 is a really hard thing to do," Sanitation Commissioner Jessica Tisch said. "I don't want to say it's achievable or not achievable." Read more from POLITICO's Sally Goldenberg and Danielle Muoio Dunn.   STEP INSIDE THE WEST WING: What's really happening in West Wing offices? Find out who's up, who's down, and who really has the president's ear in our West Wing Playbook newsletter, the insider's guide to the Biden White House and Cabinet. For buzzy nuggets and details that you won't find anywhere else, subscribe today.     WHAT WE'RE CLICKING — There are few good options for sustainable band merch that don't cost $45 for a T-shirt, Pitchfork finds. Limited edition? Let's do some simple addition. — The eminent scientist Vaclav Smil has a come-to-Jesus message for environmentalists setting "delusional" emissions targets. — Hawaii, with its heavy dependence on oil for electricity, is particularly vulnerable to price shocks from the Ukraine war, the Economist points out. A message from National Grid: National Grid is announcing our path to a fossil-free energy future for our customers and communities. Our fossil-free plan will help achieve the Northeast's aggressive climate goals and set a new standard for energy companies. We will use renewable natural gas, green hydrogen generated from wind and solar power, battery storage, and greater energy efficiency to make our National Grid system fossil-free by 2050 or earlier. Climate scientists say renewable natural gas is a win-win for the environment. There Is A Better Way to keep energy affordable, reliable, and clean. That's why we are creating a hybrid pathway that preserves customer choice while delivering the clean, affordable energy future our customers want and deserve. See How.     Follow us on Twitter Catherine Boudreau @ceboudreau Debra Kahn @debra_kahn Greg Mott @gwmott Lorraine Woellert @Woellert Jordan Wolman @jordanwolman   Follow us

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