SHAREHOLDERS FIRST
Eliminating Political Activism From Corporate America
5 YEARS WROUGHT WITH POLITICAL ACTIVISM
In 2019, 181 CEOs representing the Business Roundtable issued a letter redefining the purpose of their corporations from building strong companies for their shareholders and owners to listening, focusing, and making business decisions based on political activism.
“While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders.”
In the five years since, businesses have embraced activist policies at customers' expense, tarnished relationships with regulators, marginalized the value sets of employees, and created real risks for shareholders. Prioritizing stakeholders diverts resources away from activities that directly increase shareholder value, like dividends, share buybacks, or reinvestment in the core business. This mentality sacrifices short-term profitability, which is crucial for maintaining investor confidence.
We agree that businesses should be "generating long-term value for shareholders," by using good business practices to “deliver value to customers”, “investing in employees”, and “dealing fairly and ethically with suppliers.” However, political activists convinced CEOs that they as stakeholders and that growing “shareholder value” means pushing woke political ideas.
ACTIVISM GONE TOO FAR
In the wake of this redefined corporate mission, American businesses have grappled with a range of challenges.
BLACK LIVES MATTER DONATIONS
BUD LIGHT LOSING FOCUS
By Star Tribune via Getty Images
In 2020, American corporations donated over $82 billion to Black Lives Matter and related organizations, even though BLM did not have 501(C)(3) status for most of that year. Donations given under such dubious circumstances exposed an incredible lapse in corporate governance.
TUCKING TARGET
By Bloomberg via Getty Images
Target lost billions of dollars from its controversial marketing that alienated consumers. Target is now in litigation for a violation of its fiduciary duty, proving that adopting and supporting far-left advocacy represents a substantial risk to shareholders.
@dylanmulvaney
Bud Light partnered with influencer Dylan Mulvaney leading to a significant decline in sales. The stunt ignited a larger debate about corporate responsibility and consumer activism.
DISNEY GOVERNMENT FIGHT
By Bloomberg via Getty Images
Disney called for the repeal of a Florida law that strengthened parental rights to be repealed, resulting in considerable backlash. Disney has admitted that the high-profile dispute has cost it, acknowledging in a corporate disclosure last year that “consumers’ perceptions of [its] position on matters of public interest, including [its] efforts to achieve certain of [its] environmental and social goals, often differ widely and present risks to [its] reputation and brands.”
Tractor Supply Reverses Course
Tractor Supply recently faced significant backlash over its diversity, equity, and inclusion (DEI) initiatives. Despite previously touting its commitment to these goals, the company reversed course, eliminating DEI roles, withdrawing carbon emissions goals, and ending support for Pride events and voting campaigns.
By refocusing on its core business and avoiding partisan stances, Tractor Supply is demonstrating a commitment to its customers and investors. Other corporations, particularly those in the Business Roundtable, should consider adopting a similar strategy.
Fewer Americans Want Companies to Weigh In on Current Events
A recent Gallup-Bentley University study shows declining interest in companies taking public stances on current events and public policy. The American public is tired of companies constantly expressing opinions on social issues - dividing customer bases by political affiliation.
