The Rise and Fall of Woke Initiatives in Major U.S. Companies

How Woke Culture Influences Corporate Sustainability Efforts

by Faruk Imamovic
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The Rise and Fall of Woke Initiatives in Major U.S. Companies
© Getty Images/Hollie Adams

Unilever, a global conglomerate known for its brands like Dove, Vaseline, and Hellmann's, has long been celebrated for its commitment to sustainability and corporate responsibility. Under the leadership of former CEO Paul Polman from 2009 to 2019, the company embarked on an ambitious plan to halve its environmental impact while doubling its sales within a decade. This initiative included significant reductions in greenhouse gas emissions, waste, and water usage. However, five years and two CEOs later, there's a noticeable change in the company's approach.

While Unilever hasn't completely abandoned its environmental, social, and governance (ESG) efforts, it is now adopting a more pragmatic stance on what can realistically be achieved and the timelines for these achievements. Moreover, the company is now paying increased attention to its shareholders, subtly shifting its previously broad focus which primarily esteemed other stakeholders over investors.

The Broader Corporate Backtrack

Unilever's story is not unique in the corporate world. Many companies have recently dialed back their public commitments to sustainability and diversity, particularly in politically charged environments like election years. This trend is partly due to the increased scrutiny and the potential financial repercussions that vocal political and social stances can entail.

For instance, Google's recent actions reflect a similar sentiment. The tech giant, known for its once liberal stance on employee activism, made headlines for terminating over two dozen employees who protested its contract with the Israeli government. This move underscores a growing cautiousness among corporations about engaging in social and political debates.

Naomi Wheeless, a board director for Eventbrite and former global head of customer success at Square, encapsulates this sentiment, stating, "Many executives have made the decision that it's sometimes safer to just be silent versus to take a stance, because they have a fiduciary responsibility to their shareholders and their bottom line and are very concerned about how this will be perceived."

The Rise and Stall of Corporate Activism

The past decade witnessed what many thought was a seismic shift in corporate America's role in social activism. Influenced by customer and employee expectations, companies openly opposed policies like North Carolina's controversial "bathroom bill" and the Trump administration's environmental and immigration policies. This era saw entities such as the Business Roundtable and influential figures like BlackRock's Larry Fink advocating for a redefined purpose of a corporation, one that included being a responsible social steward.

However, the killing of George Floyd in 2020 pushed corporate America to vocalize its stand against racial injustice and to pledge to enhance diversity, equity, and inclusion (DEI) within their ranks. This response set an expectation that corporations could step in where lawmakers hesitated, as exemplified by Dick's Sporting Goods' stance on gun control.

Yet, this forward momentum has faced significant pushback. The term "woke capitalism" became a pejorative lobbed by conservatives who criticized companies like Bud Light and Target for their progressive campaigns. These companies faced backlash not just in public opinion but financially, with Morningstar reporting significant withdrawals from sustainable funds amid political and performance concerns.

Philip Mirvis, an organizational psychologist at Babson College, remarks on this shift, "It's a bona fide countermovement against both ESG and DEI," highlighting that ultimately, "for businesses, this is about making money. And in the conventional logic, all of these issues represent risks."

Activists Hold Rallies
Activists Hold Rallies© Getty Images/Michael Ciaglo
 

Navigating Corporate America's Changing Stance

Amidst the rising backlash against "woke capitalism," some corporations have started to reevaluate their public stances on various social issues. Notably, the enthusiasm for DEI initiatives seen in 2020 has cooled. Companies that once made bold public commitments to sustainability and diversity are now tempering their expressions and efforts. The Business Roundtable's redefinition of corporate purpose and BlackRock’s public admonitions for corporate responsibility seem less echoed in today’s corporate rhetoric.

For instance, Larry Fink of BlackRock now shies away from even using the term "ESG," suggesting that it has been "weaponized" in public discourse. This change in tone is part of a broader "greenhushing" trend, where companies are scaling back their public sustainability narratives. Even companies like Amazon and ExxonMobil, which had made considerable commitments to climate action, are rolling back some of their initiatives. Andrew Jones from the Conference Board's ESG Center noted, "We saw a lot of companies make very bold commitments — we're going to be net-zero emissions by whatever date, 2040, 2050. And often those commitments came, but there wasn't always the underlying work."

The quieting down on these fronts isn't solely driven by external pressures but also by internal evaluations of their practical impacts and the realization that previous commitments may have been overly ambitious.

The Corporate Cost of Social Engagement

The realignment of corporate strategies in response to social issues is not just a result of ideological pushback but also reflects a deeper analysis of the costs associated with these engagements. Alison Taylor, an associate professor at New York University’s Stern School of Business, argues that the shift isn't as abrupt as it appears. She points out that the C-suites have increasingly leaned Republican over the past decade, which might explain a shift towards less vocal social activism. Moreover, the political donations of these companies often starkly contrast with their publicized progressive values, exposing a gap that can lead to consumer and shareholder distrust.

Moreover, the issues at stake today, such as the aftermath of the repeal of Roe v. Wade and the complex dynamics of the Israeli-Palestinian conflict, are more divisive than previous challenges. Engaging in these matters carries higher risks of alienation and backlash. Taylor explains, "Now what we’ve got is the end of Roe v. Wade, and we’ve got the Middle East, and we’ve got issues where they’re much, much more divisive and difficult."

This shift also impacts internal corporate culture. Google's firings related to employee protests illustrate a broader trend where companies are reasserting control, emphasizing that their primary function is business, not activism. This has left many employees, who previously felt empowered to advocate for social change within their companies, feeling disillusioned and restrained.

The Corporate Response to Market Pressures

The changing corporate landscape is also influenced by market dynamics. The reaction to Bud Light's partnership with Dylan Mulvaney and Target's handling of its Pride merchandise show that market forces can swiftly punish companies perceived as overly political. These incidents have not only resulted in direct financial losses but have also led to a reevaluation of how brands engage with socially contentious issues.

The corporate world's response to these pressures is pragmatic. Companies are finding that while taking a stand might appease a segment of their consumer base or workforce in the short term, the long-term consequences of alienating other segments can be detrimental. This recalibration towards a more neutral corporate stance is not indicative of companies abandoning their social responsibilities but rather a strategic alignment to safeguard against volatile market reactions and maintain broader consumer appeal.

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