Investors Craft Counterattacks After Influencer’s Anti-Diversity Blitz
(Bloomberg Law) -- Shareholder groups are considering options from proxy proposals to litigation to reinstate diversity, equity, and inclusion commitments at John Deere, Lowe’s, and other companies that dropped such initiatives following pressure from conservative social media influencer Robby Starbuck.
Most Read from Bloomberg
World's Second Tallest Tower Spurs Debate About Who Needs It
The Plan for the World’s Most Ambitious Skyscraper Renovation
Madrid to Ban E-Scooter Rentals, Following Lead Set in Paris
Activist investors are weighing how to push back on at least seven public companies that have cut diversity programs targeted by Starbuck, who initiated an online campaign earlier this summer seeking to prove DEI has no place in business operations. The campaign is part of a broader conservative backlash to corporate America’s push to grow more diverse and inclusive in the wake of George Floyd’s police murder in 2020. The Supreme Court’s June 2023 decision striking down affirmative action in university admissions had a further dampening effect on corporate DEI programs, though recent polls have shown the majority of businesses remain committed to diversity but have changed the way they talk about it.
Andy Behar, CEO of shareholder advocacy group As You Sow, said his organization is considering responses to Starbuck ranging from helping investors write and file proxy ballot proposals to launching campaigns to replace board members at companies that reversed course on DEI.
“We, as shareholders, tend to work in the world of data, as opposed to Robby Starbuck, who works in the world of radical white supremacist politics,” Behar said.
Litigation is also a threat if companies don’t justify their altered DEI commitments delicately, New York City Comptroller Brad Lander said. Last year already saw a rise in shareholder lawsuits alleging companies made misleading statements about their diversity goals after Floyd’s murder or have fallen short of meeting their promises.
Lander said he’s regrouping after Starbuck’s initial successes, but companies that caved to his demands should be “on notice.” The comptroller manages funds across five city employee retirement systems that hold shares in the seven companies targeted by Starbuck totaling almost $500 million.
“We’re not going to stand by as folks with no track record in investing try to roll back proven strategies for advancing diversity of companies across the economy in effective ways,” Lander said.
Hit List
Starbuck began his campaign by getting concessions from Tractor Supply Co. in June; fellow farm equipment supplier Deere & Co. followed three weeks later. He then extracted major concessions from Jack Daniels whiskey parent company Brown-Forman Corp., Molson Coors Beverage Co., Harley-Davidson Inc., and American automaker Ford Motor Co., in addition to Lowe’s Companies Inc.
Among Starbuck’s wins were promises—announced publicly or in company-wide memos from Tractor Supply, Brown-Forman, Harley-Davidson, Lowe’s, Ford and Coors—to withdraw from a “Best Places to Work” index organized by the LGBTQ advocacy organization Human Rights Campaign. Lowe’s said it would merge employee resource groups under one umbrella and allow workers to join any affinity group they like regardless of whether they identify with that group. Tractor Supply said it would scrap all DEI programs and related jobs. Coors announced it would stop linking executive compensation to employee diversity.
Brown-Forman started its work on diversity and inclusion nearly 20 years ago, and launched its official strategy in 2019, spokesperson Elizabeth Conway said.
Since then, the world has “evolved, our business has changed, and the legal and external landscape has shifted dramatically, particularly in the United States,” Conway said. “Brown-Forman adjusted its work to ensure it continues to drive our business results while appropriately recognizing the current environment.”
A spokesperson for Ford said the company’s memo “speaks for itself,” and did not elaborate.
Spokespeople for the other five companies did not respond to a request for comment.
“If you have conservative consumers you’re depending on to walk through your doors, I think it’s a really dangerous thing to align yourselves with the political ideology, because DEI is essentially a Trojan horse for left-wing policy,” Starbuck said in an interview, noting he isn’t finished.
His strategy, he told Bloomberg Law, is to target companies that operate in areas of the country or have customers whose demographics indicate they are more likely to be sympathetic to his ideas.
Starbuck declined to name his next targets, but noted he has an eye on multinational companies with greater reach, revenues, and employee numbers.
“Before you know it, you know, if you have some dedication to this, the norm will become companies staying out of these issues, and the weird companies will be the ones who get involved,” Starbuck said.
“I think, you know, in a weird way, DEI actually encourages a certain kind of racism,” Starbuck, who’s Latino, added. “I prefer to judge people based on sort of their actions, who they are, their character, the merit they show in their work.”
Shareholder Proposals
Lowe’s was a bold target for Starbuck: just two years ago, its investors passed with nearly 60% of the vote a proposal from Arjuna Capital that asked the company to issue reports detailing racial and gender pay gaps. It’s rare for such bids to pass; this past proxy season just three environmental, social, governance-related shareholder bids gained majority support, and those were on climate goals and political spending.
The home improvement giant issued a report in December 2022 that showed female associates’ median pay in 2021 was about 97% of male associates’ median pay, while minority associates’ median pay was approximately 99% of non-minority associates’ median pay. It also disclosed that women and minorities earn equal pay of comparable male and non-minority associates’ pay, statistically adjusted for role and tenure.
Natasha Lamb, managing partner and co-founder of Arjuna Capital, said she was disappointed that Lowe’s was swayed by Starbuck, but doesn’t have any plans yet to file another similar proposal.
“It’s critical that companies don’t ignore the investor voice,” she said. “If a majority, or even a significant portion of a company’s investors are pressing for best practice and improvement in companies, they should be listening, should be consistent and uphold those goals and objectives.”
Companies need to explain their actions, said Meredith Benton, founder of Whistle Stop Capital, a consulting firm that helps companies with DEI initiatives—especially those that affect a specific demographic.
Withdrawal from the Human Rights Campaign Corporate Equality Index and workplace rankings for employees who identify as LGBTQ, for instance, could spark outrage, Benton said.
Such withdrawals indicate “they no longer view that as an important community—either within their employees or their consumer base,” she said. “This is not the sort of thing that a company can expect to do without repercussions for their brand and growth, and that’s our concern.”
To contact the reporter on this story: David Hood in Washington at dhood@bloombergindustry.com
To contact the editors responsible for this story: Amelia Gruber Cohn at agrubercohn@bloombergindustry.com; Jeff Harrington at jharrington@bloombergindustry.com
Most Read from Bloomberg Businessweek
‘They Have Stolen Our Business’: When You Leave Russia, Putin Sets the Terms
How Local Governments Got Hooked on One Company’s Janky Software
Howard Lutnick Emerges as Trump’s No. 1 Salesman on Wall Street
The Average American Eats 42 Pounds of Cheese a Year, and That Number Could Go Up
©2024 Bloomberg L.P.
