How Companies Are Seduced by the Woke Side

Angry customers have visited their wrath upon Bud Light, Target, Kohls as well as other high-profile companies that have dived headlong into the culture war. What motivates corporations to risk their corporate reputations in embracing extreme woke politics continues to baffle moderate, conservative, and even a significant portion of progressive-leaning Americans. So why do they do it?

The answer, in a nutshell, is enormous pressure from the Human Rights Campaign (HRC), the nation’s largest LGBTQ+ organization.

Raking in $46 million in revenues in 2020 alone, HRC is a formidable leftwing political juggernaut. HRC leverages its political standing to pressure major corporations into implementing its extremist agenda. Its chief weapon is its Corporate Equality Index (CEI), which assigns companies a numerical score based on their compliance with criteria related to their support of and engagement with the LGBTQ+ community.

Even companies one would not presume to be woke devote considerable resources toward scoring well on the annual CEI survey. Many manage to score in the 60% to 70% range by, for example, specifically itemizing both “sexual orientation” and “gender identity or expression” in their nondiscrimination policies. This only counts for 5 points, perhaps because HRC claims that 99.7% of responding companies already do this. Extending access to all medical benefits to same-sex partners and domestic partners earns a company 10 points. Offering “family formation benefits” to same sex and domestic partners is worth another 10 points. Companies score 5 points for transgender inclusion best practices which include “supportive restrooms,” gender neutral dress codes, policies for “optional” sharing of gender pronouns. Having an employee resource group or a diversity council adds another 10 points to a CEI rating. Points incentivize employers to conduct outreach efforts or engage with the broader LGBTQ+ community by specifically recruiting LGBTQ+ employees. Instituting a “supplier diversity program” that specifically seeks out suppliers with LGBTQ+ owned businesses is another item on the basic checklist.

Companies can accede to all those demands offending a major portion of their customer base and yet receive just a mediocre CEI rating. Getting the maximum 100 points requires a company to go way over the top and would place it squarely at odds with mainstream American values. Astonishingly, many of them do. In fact, more than 800 businesses currently rate a 100% CEI score, including 15 of the top 20 companies on the Fortune 500. By definition, a perfect CEI store means that a company:

• Offers healthcare benefits to employees and dependents which includes “Coverage for reconstructive surgical procedures related to gender reassignment including reconstructive chest, breast, and genital procedures.”
• Provides mandatory DEI training for employees.
• Conducts a “Bud Light”-style marketing or advertising campaign with LGBTQ+-oriented content.
• Offers products or services specifically targeted to LGBTQ+ consumers.
• Donates to at least one LGBTQ+ organization
• Lobbies for advancing the LGBTQ+ agenda through local, state, or federal legislation or initiatives.
• Forces contractors and suppliers of that company to adopt many of these same policies.
• Adheres to HRC’s philanthropic giving guidelines which prohibit gifts to organizations which are inconsistent with LGBTQ+ values. From a practical standpoint, this means that no corporate charitable contributions may be directed to conservative, religious, or other organizations that aren’t fully aligned with the LGBTQ+ agenda.

On the surface, it does not seem rational that companies continue their devotion to these woke policies, even in the face of consumer outrage – and from a fiduciary standpoint – suffering share prices. Literally hundreds of major companies continue to issue press releases bragging about their CEI score. A number of these same top-scoring companies stand accused of benefitting from Chinese slave labor, tolerating workplace abuses against women and number of other questionable business practices. It’s reasonable to take a moral devotion to human rights off the table as their prime motivation. Beyond the press release, then, what is the value of their CEI score?

Americans have the right to know, for example, whether a high CEI rating can either directly or indirectly translate to a better ESG score. For major corporations, a high ESG score has very practical, concrete value in terms of accessing financing or even being able to do business with other companies. Can a high CEI score result in inclusion on certain coveted index funds? It’s also important to know whether a corporation’s score may translate into a lower interest rates on bank loans. The answers to these questions have the potential to factor into fiduciary requirements from participating banks and financial institutions.

Corporate America is dancing to the woke tune of a single actor in an attempt to reshapes the nation’s culture in its own image – without the consent of the American people. At a minimum, this situation demands complete transparency into who financially benefits from this nefarious arrangement.

Noah Wall is the Executive Vice President for Policy and Government Affairs at the State Financial Officers Foundation.