In a War on ‘Woke Capitalism,’ What’s a Good Company to Do?

(Illustration by iStock/akinbostanci)

“Right-wing anger at ‘woke capitalism’ is scaring corporate America.”

“US investors ditch green funds as ‘woke capitalism’ backlash bites.”

“The war against ‘woke capitalism’ is coming to the EU.”

The headlines screaming about a war on so-called “woke capitalism” are difficult to avoid. They reflect what is now a powerful counter-movement to recent efforts at enhancing companies’ social and environmental performance; to corporate leaders speaking out on issues like climate change, social justice, and diversity, equity, and inclusion (DEI); and to attempts to build these concerns into financial markets.

The backlash is in legislatures, where 18 US states have enacted laws to prohibit agencies from doing business with financial institutions that consider environmental, social, and governance (ESG) factors in investment decisions. It’s in company boardrooms, where shareholder resolutions calling on companies to cease their ESG and DEI activity have tripled in the last three years. Most visibly, it’s in the public square, where intense campaigns led by conservative pundits, alt-right social media trolls, and US presidential candidates have targeted companies for supporting a variety of social justice causes. Consider two recent examples:

• In Florida, the Walt Disney Co. first tried to escape the debate over that state’s so-called “Don’t Say Gay” bill. But Disney employees spoke up, staged a walkout, and were supported by widespread protests. The company then voiced its dissent against the bill and Florida Governor Ron DeSantis orchestrated legislation that stripped Disney of its special governing status in the two Florida counties where Disney World operates.

• Right-wing media figures took exception to the beer brand Bud Light for partnering with transgender influencer Dylan Mulvaney. Calls for a boycott followed—catalyzed in part by the musician Kid Rock who posted a video of himself shooting a stack of Bud Light cases. The campaign against Bud Light dented the sales of what was, before the boycott, the top-selling beer in America.

Lest these seem to be isolated incidents, conservatives have also called for boycotts against Amazon, Gillette, Keurig, Macy’s, Netflix, Nike/the NFL, Nordstrom, Starbucks, and Target. A recent survey of 125 firms by the Conference Board found that nearly half have already experienced backlash over ESG and 61 percent expect it to persist or intensify in the next two years.

So, what’s a company to do? Disney stood up for its principles and fought back. Bud Light’s parent company, AB InBev, surrendered when its CEO said, “We never intended to be part of a discussion that divides people,” and then put the marketers behind the Dylan Mulvaney campaign on leave. Meanwhile, many mainstream US companies are “hushing up” about ESG, “stepping back” from addressing social and political issues, and “cutting back” on their investments in DEI—a big target of anti-woke activists.

What’s a good company to do? Consider these “rules of engagement” when you and your organization take a stand.

Be Strategic

The first rule in any corporate effort to address a social or environmental issue is to be strategic. Business can’t address every social and environmental problem. How does a firm decide which ones are most relevant to its interest and set its priorities? Let’s start with Bud Light.

Is this issue relevant to our business? DEI is “material” to most every company—it’s a key factor in retaining and recruiting both employees and customers and it informs HR, product development, and marketing decisions, all of which affect the bottom line. A 2020 McKinsey study tracked six years of data and found that more ethnically and culturally diverse businesses are as much as 36 percent more profitable than the least diverse companies. Message on DEI: It matters.

But what did DEI mean for Bud Light? Estimates are that the global LGBTQ+ community has $3.7 trillion in purchasing power and Bud Light was likely betting that a partnership with a trans influencer during Pride Month would add to its relevance with Gen Z—1 in 5 of whom self-identify as LGBTQ+.

Sounds plausible, but consider this: According to a 2019 Edelman Trust report, 56 percent of people believe that too many brands are guilty of using social justice issues to get in the public’s good graces with the sole intent of selling more “stuff.” What’s in question is whether Bud Light’s partnership with Mulvaney was an effort to support DEI and social justice or a marketing ploy to sell more stuff.

Are we aligned with our employees, customers, and other stakeholders? One important early step is to do the necessary homework about the issue(s) you are addressing and interact with relevant stakeholders. Stakeholders associated with an issue can educate you about it; advise and provide feedback on your ideas, stance, and plans; and even work with you or co-create actions and campaigns.

Studies find that “queer-inclusive” ads help consumers remember brands better, inspire higher-priced purchases and foster a more progressive company image. But there is no evidence that Bud Light’s marketers engaged with any LGBTQ+ associations, worked with experts in this arena, or sought the advice of internal LGBTQ+ employee resource groups before launching its campaign. Skipping this kind of engagement (and not stress testing its adverts with both LGBTQ+ and non-LGBTQ+ audiences) means companies may not be well versed in the dos and don’ts associated with this kind of campaign.

Things really fell apart with AB InBev’s cop out on its commitment to DEI. Saying it did not intend to be divisive did not placate right-wingers and outraged the LGBTQ+ community. Several gay bars stopped serving Bud Light. The Human Rights Campaign informed AB InBev that it suspended its Corporate Equality Index (CEI) score—a tool that scores companies on their policies concerning LGBTQ+ employees.

Getting it Right. Compare AB InBev’s performativity with Nike’s all-in approach to LGBTQ+ issues. Nike celebrated 2023 Pride month by supporting more than 20 LGBTQ+ organizations via grants and launched its BETRUE collection of Pride flag t-shirts, hoodies, and sneakers. Its campaign featured eminent LGBTQ+ Nike athletes and allies across the world of sport. That’s what taking a relevant social issue seriously looks like.

Less than a week after Dylan Mulvaney was shunned by Bud Light, she was approached by Nike, in a paid partnership, to model leggings and sports bras on social media. Nike was condemned by Olympic athletes Sharron Davies and Caitlyn Jenner, but rather than backtrack, Nike doubled down, telling its customers to be “kind” and “inclusive” and to stop yielding to “hate speech, bullying, or other behaviors.”

Be Authentic

A second rule when engaging a social issue is to be authentic. What does it mean to be authentic? Disney’s pushback on the Florida legislation is instructive.

Do we have any history of dealing with this issue? While Disney was by no means a pioneer in its support of LGBTQ+ issues, it learned and adapted much like other businesses, the US armed forces, and indeed the nation. Back in the 1980s, Disney was twice sued for prohibiting men dancing together at Disney World. But in June 1991, activist Doug Swallow organized a coordinated mass trip to Disney World, attended by 3,000 LGBTQ+ people wearing red shirts to identify themselves. “Gay Days” became an annual event at the park and now brings more than 150,000 LGBTQ+ people to Orlando every June.

In 1997, the Southern Baptist Convention called for a boycott of the park. One of its leaders said, “You can’t walk the family side of the street and the gay side of the street in the Magic Kingdom at the same time.” Disney’s response at the time: “We are not going to turn people away from our parks any more than Southern Baptists would turn these people away from their churches.”

What does our company truly stand for? In 1995 Disney became one of the first companies to offer health benefits to same-sex partners of employees (prompting conservative backlash). Many of its prominent producers and artists are openly gay according to a recent report and an estimated 20 percent of the people who work at Disney’s headquarters in Burbank, California, are LGBTQ+. In 2017, then-CEO Bob Iger declared that LGBTQ+ equality and inclusion were at the heart of the company’s values.

Yet when employees agitated for over Disney’s political contributions to legislators who passed Florida’s “Don’t Say Gay” bill, Iger’s successor, CEO Bob Chapek, twice refused to speak out against the bill and then dissembled that Disney products like Encanto and Modern Family support diversity and are “more powerful than any tweet or lobbying effort."

Meanwhile, Iger weighed in against the legislation. “A lot of these issues are not necessarily political,” Iger told CNN’s Chris Wallace. “It’s about right and wrong, and that just seemed wrong. It seemed potentially harmful to kids.” He went on, “I just think you have to do what is right and not worry about the potential backlash to it.”

After a slew of social media posts, protests, and a walkout by Disney employees, Chapek apologized to LGBTQ+ staff. "I let you down. I am sorry." The company then pledged to stop Florida political donations and to oppose “any legislation that infringes on basic human rights.”

Chapek was fired in November 2022, and replaced by former CEO Iger. It wasn’t the brouhaha with politicians that led to his dismissal. Rather it was a string of poor business decisions and for being “out of touch” with Disney’s “cast members”!

Getting it right. Authenticity is a vital consideration in corporate marketing and branding. Research shows that over 85 percent of US consumers cite brand authenticity as a significant factor when deciding which brands to support. Select companies have a heritage of engaging important issues in society. Patagonia, North Face, and Timberland campaign about the environment and climate change; Levi Strauss, Natura, and Lush have taken on the fast fashion and beauty industries; and many companies support the LGBTQ+ community well beyond Pride Month. Their support has been reliable, consistent, and on brand.

Be Responsible

A third rule when engaging a social issue is to be responsible. At its core, this means ensuring that your engagement is based on ethical principles including honesty, integrity, openness, and transparency. Let’s move now beyond Bud Light and Disney to consider how these principles can prevent you from “green washing” or “woke washing.”

Are we engaging this issue with honesty and integrity? Who’s failing on this count? Take fast fashion brands that promote International Women’s Day while simultaneously profiting from exploiting female workers in their global supply chains. The beauty industry is also guilty of hypocrisy: A 2020 report found that dark skin tones appeared in only 13 percent of the 70 top beauty brands’ visuals in 2019 but jumped by 122 percent between May and July 2020 amidst Black Lives Matter (BLM) protests. By September 2020, just two months later, the majority of these brands had reverted back to business as usual, using lighter-skinned models.

A wised up public wants companies to move from “tell me” to “show me.” What is being called for is radical transparency about what companies are accomplishing in the green and social arena. A recent study of how US brands responded to BLM found that the public could distinguish between the sincere motivations of true allies (who pledged monies and had strong DEI records) versus performative allies (who pledged support but not money and did not have strong DEI credentials).

Are we acting in good faith or virtue signaling? Pepsi’s infamous ad featuring model Kendall Jenner, seeming to align itself with the BLM movement, illustrates the problem of virtue signaling. The ad, set to music by Skip Marley, followed an ethnically diverse group of young people, fashionably dressed, joining a protest. Jenner sheds her fashionable dress, removes her blonde wig, and challenges police brutality with a can of Pepsi. Social media erupted about the company trying to “cash in” on the BLM movement. The ad was pulled in 24 hours and Pepsi issued a public apology.

Do we have the commitment to tackle this social issue? When taking on a social issue, a firm’s stakeholders expect a company to be dependable, keep its promises, and follow through on its commitments. Increasingly, corporate watchers scrutinize data on how much a company invests, how its efforts are managed, and to what extent they produce their promised social impact. They also want to know whether a company practices what it preaches internally.

Take corporate actions and investments in racial justice and DEI. After the 2020 murder of George Floyd, thousands of firms made commitments to fight racism. McKinsey & Co. estimated that corporations pledged $340 billion over the next three years to advance racial justice. Philanthropy is good, but DEI experts report that in the wake of the BLM movement many companies did not implement substantial changes in their recruiting, screening, or employee engagement efforts needed to attract and retain minority staff. A 2023 report on DEI progress in large companies reveals that more than half (52 percent) rate themselves very poorly on their accomplishments.

Getting it right. JP Morgan Chase CEO Jamie Dimon was pilloried for performativity from both left and right when he “took a knee” with his staff after the killing of George Floyd. Undaunted by the catcalls, JPMorgan Chase introduced its Racial Equity Commitment in October 2020, pledging $30 billion over the next five years to address the racial wealth divide, to reduce systemic racism against Black and Latinx people, and to support its diverse employees.

Besides spending on affordable housing and minority business lending, the bank also opened 76 branches in underserved and low-income communities and helped over 406K customers open new low-cost, no overdraft checking accounts. Internally, it hired 146 new Black and Latin financial advisors (an area where its performance had been abysmal) and made diversity training mandatory for all employees. Importantly, its program and impact are audited by an independent third party.

Be Effective

The fourth rule when engaging a social issue is to be effective—your engagement with a social issue should aim to produce benefits for those affected by the issue and for your own organization and brand. Studies document that companies that are most successful with their engagements with social and environmental issues (climate change, DEI, pay equity, etc.) have: 1) CEO and executive leadership; 2) organization-wide buy-in; 3) clear strategy and goals; 4) sufficient investment; 5) targeted measurement and monitoring; and 6) credible internal and external communication, among other factors. None of this is easy to do, inexpensive, or without complications. In the teeth of anti-woke challenges, other key issues rise to the fore.

Can we make a significant and distinctive impact? A best practice example here is Unilever’s “real beauty” campaign for Dove soap. Company research found that just 12 percent of women were very satisfied with their physical attractiveness; 68 percent strongly agreed that the media sets an unrealistic standard of beauty; and 75 percent wished the media did a better job of portraying the diversity of women’s physical attractiveness, including size and shape, across all ages. Dove’s public message about real beauty was conveyed in advertisements showing “real women have curves” and a film that shows how fashion model images are distorted to conform to an idealized but unattainable type. This message was carried into schools around the world in a program to promote young women’s self-esteem.

Mission accomplished? Not at all; the campaign continued when Unilever partnered with the world’s largest stock photo provider, Getty Images, and with Girlgaze, a group of female-identifying and nonbinary photographers, to build a publicly accessible library of “unedited” pictures of real beauty. Its #ShowUs photos feature in Unilever ads, with taglines like “beauty doesn’t rest at 67” and “all skin is beautiful,” and Unilever agreed to cover the fees of any #ShowUs models who appear in other company’s ads! Now that’s original!

Do we have “allies” that support us in our stand? Companies today rely on respected NGOs to certify that their supply chains pass sustainability screens and that their products qualify as organic, “cruelty free,” or Fair Trade. In philanthropic and CSR activities, companies often partner with charities and NGOs to deliver services to society. Why so? Few firms have the appropriate mix of staff, resources, and know-how to operate in this space on their own and in any case may lack the legitimacy with local communities to do so.

Take a look at corporate engagement with the LGBTQ+ community. Bud Light got hammered not only by anti-trans activists but also by the LGBTQ+ community for its one-off ad campaign. By contrast, Disney has been supported from LGBTQ+ support organizations in its ongoing battle with Florida—and gained the support of the Leadership Now Project, a bipartisan, pro-democracy group made up of 400 business leaders, who filed a "friend of the court" amicus curiae brief in Disney’s lawsuit against Ron DeSantis for his retaliatory actions.

A recent report on “The Future of Business-NGO Partnerships” finds that multi-sector collaborations are far more effective than the actions of individual companies and NGOs in promoting social change.

Is it all about “selling more stuff”? Edelman’s 2020 Trust Barometer finds that 90 percent of employees, in a sample of over 34,000 surveyed across 28 countries, want their CEOs to “speak out” on social issues such as income inequality, DEI, climate change, and immigration. Another survey reports that 86 percent of consumers think brands should take a stand on social issues, with 64 percent saying they are very likely to make a purchase based on that commitment. All of this informs the “business case” for companies to take action on the issues of the day.

Today, “intangibles” account for nearly three-fourths of publicly-traded companys’ market value. Now some of this intangible value reflects a company’s intellectual property—patents, trademarks, copyrights, and such. But the lion’s share is based on a company’s reputation; its relationships with customers, employees, suppliers, and other stakeholders; confidence in its management; and its perceived contribution to society. Judy Samuelson, author of The Six New Rules of Business, says it plainly: “Reputation, trust, and other intangibles drive business value.”

Getting it right. Nike took a risk, and scored a huge win, with its 30th anniversary “Just Do It” campaign, fronted by the politically polarizing NFL quarterback Colin Kaepernick, who gained notoriety by kneeling during the national anthem in protest of racial inequities. Many lauded the company on social media, but some posted videos in which they lit their Nike shoes on fire. Nike’s stock price dipped 3 percent right in the immediate aftermath but subsequently saw its market value increase $6 billion dollars over the next three months.

These “rules” for engaging a social issue are not bulletproof and no guarantee that your company won’t be criticized as “woke,” attacked on social media, or even boycotted. But embracing them can help you to defend your position and fight back. On this count, the evidence is clear that companies that take an authentic and sincere stand on social issues can also gain from a “buycott” and win the approval of their employees, consumers, and investors.

My own research finds that companies that lead social change do not make a business case for every action they take, contemplate the risk/rewards of everything they do, or speak out solely for the sake of reputation. Instead, they turn to their animating purpose, core beliefs and values, and sense of right versus wrong to guide them. Listen to what Disney’s Iger told his employees: “How we actually change the world through the good must continue. We’re not going to make everyone happy all the time, and we’re not going to try. We’re certainly not going to lessen our core values in order to make everyone happy all the time.”

Read more stories by Philip Mirvis.