American business is coming under increasing pressure to publicly promote and financially support social agendas that aim to fundamentally transform American society and forever alter the understanding of our past. The trend, at least in its current form, is relatively recent. A mere five years ago The Wall Street Journal’s Spencer Jakab warned corporations against taking social stands in “Trump’s America,” arguing that “as American society becomes more divided it is becoming more dangerous to mix business and politics.” Fast forward to late 2020 and we find Northwestern University marketing professor Jonathon Copulsky stating, again in the Journal, that when it comes to social justice issues, “I can’t think of a large corporation where not saying anything benefits them at this point.” Times have changed. The same Journal article singles out issues of diversity, inclusion, and racial equity as of particular importance and quotes PwC US chairman Tim Ryan to the effect that while there are risks in taking social stands, the risks in not doing so are greater.
Not mentioned but undoubtedly among the risks is losing access to capital. The US SIF Foundation, an advocacy group billing itself as “the forum for sustainable and responsible investment,” recently released a report touting the rapid growth in socially-motivated investment. As of 2020 approximately 16.5 trillion in professionally managed assets in the US — roughly one third — utilize some form sustainable-investment criteria to evaluate corporate performance on “Environmental, Social, and Governance” or “ESG” issues. This represents a 42% increase from 2018. The trend is thus not only recent, but accelerating.
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