(Daily Mail) Companies appear to be finally coming to the conclusion that going woke could mean going broke – or at least see their share price fall to uncomfortable levels.
An analysis of earnings calls has seen a sudden and rapid fall when it comes to firms mentioning the terms ‘diversity, equity and inclusion’, ‘green and social initiatives’ and ‘sustainability’ in quarterly calls to investors.
There were close to 1,000 mentions of such causes in earnings calls until the start of Quarter 1 of 2022. By Quarter 2 of 2023, the space of 15 months, the number appears to have almost halved with 575 mentions of these woke terms.
There was a 31 percent drop in mentions of woke issues during earnings in the most recent quarter, compared to the same earnings period last year, according to The Wall Street Journal.
In two of the most high-profile cases in recent months, both Target and Bud Light have borne the brunt of what it means to upset their loyal customer base – and ultimately their investors, as share the price plunges.
Cynthia Gaylor, CFO of electronic signature firm DocuSign didn’t make any mention of sustainability initiatives in a recent call, despite repeatedly hailing the firm’s progress on green issues in previous calls
But it now appears that increasing pressure from conservative activists and investors is sparking a change in strategy. Investors want companies to focus on their core business operations rather to be seen doing ‘social good’.
When it comes to issues of sustainability, the electronic-signature firm, DocuSign, with a market cap of $11 billion, announced its carbon-neutral status in March 2022, with plans to achieve net-zero emissions by 2050.
But there has not been a single mention by company’s executives including Chief Financial Officer Cynthia Gaylor of any of the previously discussed sustainability initiatives, carbon-neutral status, or net-zero emissions during earnings calls.
There has not been a single mention by DocuSign company executives including Chief Financial Officer Cynthia Gaylor, pictured, regarding any of the previously discussed sustainability initiatives, carbon-neutral status, or net-zero emissions during earnings calls
Gaylor will step down as CFO of the company on Thursday. The company has not given a reason for the change but but insists they still invest in environmental, social, and governance programs regularly updating investors on their initiatives.
DocuSign say they are continuing efforts to reach net-zero emissions no later than 2050.
Data from the earnings calls gathered by AlphaSense say executives mentioned the terms 31 percent fewer on earnings calls from April 1 to June 5 of this year compared to 2022.
The drop is a marked shift when companies would normally tout such initiatives as a selling point, and one that might attract investors.
It is the largest year-over-year decline in the last five quarters, following a surge on such topics following the death of George Floyd in May 2020.
Chief financial officers who are the ones who often oversee ‘sustainability and diversity’ efforts, have also seen the mention of such topics fall.
CFOs at U.S.-listed companies mentioned ESG, sustainability, and related matters on 30 percent fewer calls compared to same time period from the previous year.
‘The easiest thing to do is just to stay out of the conversation and emphasize other facets of business that are going to be perceived as less controversial and more core to the traditional metrics of the business,’ said Jason Jay, a senior lecturer of sustainability at Massachusetts Institute of Technology, to the Wall Street Journal.
Although the companies appear to avoiding discussions on divisive issues as part of a larger strategy, there is little evidence to suggest that they are pulling back from actual sustainability initiatives which are still being performed in the background.
Many of the companies issue detailed sustainability reports, disclose greenhouse-gas emissions with some preparing for upcoming climate-disclosure requirements from the Securities and Exchange Commission.
A survey by KPMG suggests 70 percent of U.S. CEOs believe their company’s ESG programs improve financial performance, but the way in which companies are conveying such messages is now being adjusted in an effort to avoid controversy.
The news comes as Target has shed $15 billion from its market cap in recent weeks, as outrage over its decision to stock ‘tuck-friendly’ transgender bathing suits and Pride merchandise grows.
Target has lost billions of dollars in market capitalization in the span of a few weeks as it continues to face backlash for its Pride-themed clothing line
One controversial element of the store’s pride line were swimsuits that were advertised as having ‘extra crotch coverage’ and room for ‘tucking.’ The design is ostensibly to accommodate individuals with male genitalia who want swimsuits designed for women
On Monday the Minneapolis-based firm’s shares slipped by another half percent by close of trading. Target’s share price now sits $126.48-per-share, down from a high of almost $162-per-share last month.
Before the becoming engulfed in the controversy Target’s market value stood at over $74 billion, according to Dow Jones Market Data Group. Its market cap – calculated by multiplying the number of shares by the price per share – now sits at just $58 billion.
Target is one of several major corporate brands facing backlash for its promotion of LGBTQ-friendly items during Pride Month.
Some consumers became especially distraught when they saw Target’s extensive Pride line, which included clothing for children, and items of clothing that appeared to be for women, but were advertised as having room for ‘tucking,’ in case the buyer possessed male genitalia.
The company held an emergency meeting and decided to downsize and relocate some Pride merchandise so that it’s less visible in stores.
CEO Brian Cornell also released a statement saying that the company had pulled several items that have ‘been at the center of the most confrontational behavior.’
‘Since introducing this year’s collection, we’ve experienced threats impacting our team members’ sense of safety and wellbeing while at work,’ the firm said in its statement.
Bud Light’s popularity continues to plummet as both corporate and personal events pivot away from featuring the Anheuser-Busch brand at their gatherings.
