ESG and LGBTQ+-inclusive DEI programs benefit business. Why have federal, state, and local political authorities threatened consumer retaliation and legislation against ESG and DEI, LGBTQ+ inclusive or not?
Though their objectives are ambiguous, their technique is not. The growing number of legislative attacks on trans rights provides the roadmap.
Step one: find and promote a misleading claim that instills fear, such as trans persons threatening society and children. The recently passed “Don’t Say Gay” bill in Florida is a 50-year-old replica of Anita Bryant’s “Save Our Children” campaign.
Step two: utilize fear to spark national outrage, as when a Bud Light marketing campaign starring a trans social media personality sparked conservative commentators and celebrities to boycott.
Step three: use that indignation to force firms to back off diversity, which seems to have done little to calm customers on both sides of the issue with Bud Light and Target.
Step four: apply transphobia to a broader “strawperson,” such as “corporate wokeism” or ESG.
Fortunately, this bad plan is doomed. Because ESG is good for business, regardless of signaling, and the bottom line wins.
This past July, an Open Letter submitted to the Chair of the House Financial Services Committee defending the business case for ESG, laid out three key reasons why ESG and LGBTQ+-inclusive DEI initiatives add value to businesses:
First, sustainability and inclusivity are desired. For shareholder value, companies will only act in their sustainable, bottom-line best interest. ESG becomes a more relevant roadmap to handle major ESG concerns including climate change and workforce diversity. ESG policies, processes, and reporting have consistently produced favorable business results, therefore a supermajority of US Fortune 500 corporations have implemented them.
Second, risk reduction. Environmental disaster litigation, regulatory penalties, and reputational harm are better mitigated by diverse boards. The number of Nasdaq businesses having LGBTQ+-inclusive board diversity policies surged by 1,556% from 2022 to 2023, demonstrating the importance of diversity. ESG investments have shown resiliency during market downturns, providing counter-cyclical advantages.
Third, hiring and retaining talent. LGBTQ+ workers would switch careers for a more inclusive and sustainable company. They want inclusivity and environmental stewardship, and Gen Z workers care more about representation and sustainability. This, plus the fact that 20% of Gen Z is LGBTQ+, makes ESG and LGBTQ+-inclusive diversity essential for modern organizations and employees. States passing alarming amounts of anti-LGBTQ+ laws are losing key talent, threatening their economies.
Businesses, especially global multinationals, have clear fiduciary responsibilities, thus they would not implement ESG practices if they were not in their best financial interest. The board’s legal commitment to shareholders always trumps politicians’ strategic, social undermining. Politicians that try to regulate ESG with frivolous legislation harm the business environment by interfering with firms’ operations.
Greenberg Traurig partner John Richards said it best: “The reality is simple: inclusive programs create environments where employees can be judged by their achievements, not by who they love. Good for workers and vital to business profits.”
When North Carolina passed HB-2, the anti-trans bathroom bill, a coalition of more than 50 asset managers and investors representing $2.1 Trillion in assets invested in NC said the unfounded law created market risk and decreased their return on investments. State spending on politics was approximately $4 billion.
Political leaders used to attract firms with cheaper taxes, well-educated workers, and favorable laws. Anti-ESG activists are stifling the economy by undermining their biggest firms’ knowledge and fiduciary responsibility.
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Tran Dung/Ates Global
*Source: Forbes
