Tragic Trans Battle Of The Brands

Consumers across the country were bewildered last week when Budweiser and Nike waddled into the transgender debate.

Inexplicably, in less than a week, both the King of Beers and the athletic apparel behemoth dubbed trans activist Dylan Mulvaney the new face of their respective brands. 

It doesn’t take a marketing executive to spot that this probably isn’t a winning sales strategy. 

But the knee-jerk response among most people is: What the heck is going on in corporate America?

What the heck is going on in this country? 

Sure, it’s a fast-track for a CEO to virtue signal and curry social status and power.

But that’s only a piece of the story. 

This is just the latest episode of a mystifying trend in corporate culture.

I wrote an entire book, “Woke, Inc.,” about it, but there’s a more complex dimension that deserves an exploration of its own: the ESG movement in capital markets.

I expose this trend in my sequel “Capitalist Punishment” later this month (that’s not a plug, that’s a promise). 

Here’s how the game works: The world’s largest asset managers use your retirement funds, 401(k) accounts and investment dollars to pressure US companies to adopt political agendas that most Americans did not and would not vote for at the ballot box.

This isn’t a theoretical idea or a conspiracy theory. It’s a plain description of reality. 

Chevron buckles 

Take what happened at Chevron in 2021: A Dutch nonprofit founded by a former refrigerator salesman who wanted to fight climate change submitted a shareholder resolution demanding that Chevron reduce “Scope 3 emissions.”

The Environmental Protection Agency’s website defines those as emissions that are “the result of activities from assets not owned or controlled by the reporting organization, but that the organization indirectly impacts in its value chain,” including employee commuting, leased assets and downstream use of products by customers. 

This is a completely senseless decision for an American oil company to make — it’s like asking McDonald’s to take responsibility for reducing the body weight of adults who eat Big Macs, without asking the consumer to share any semblance of responsibility. 

Chevron’s board initially recommended to shareholders against adopting the proposal.

Yet BlackRock, State Street, and Vanguard nonetheless voted in favor of the proposal, giving it majority “shareholder” support.

And Chevron buckled under that pressure, eventually adopting Scope 3 intensity targets and a number of other self-flagellating measures. 

Apple felled too 

Or take what happened to Apple.

In 2022, the company faced a shareholder proposal calling on the tech giant to conduct a “racial equity audit.”

An official of the Service Employees International Union said it “spearheaded” Apple’s racial-equity proposal because companies have “a negative effect on marginalized communities — including Black people, women, LGBTQ+ individuals, and people with disabilities — by reinforcing systems of inequity and creating products with real-life dangers.”

Color of Change, which pressured the company to do the audit, says its mission is “to hold companies accountable for the ways they perpetuate white supremacy.” 

Notably, that has nothing to do with maximizing shareholder value. 

Just as in Chevron’s case, Apple’s board recommended against the racial-equity audit.

Yet again, BlackRock and State Street voted in favor of the proposal.

Apple then agreed to conduct the racial-equity audit. 

This is wrong and deeply concerning — especially because these instances are not anomalies but the new norm.

Home Depot was also browbeaten by social activists — in the form of a shareholder proposal BlackRock supported — into adopting a racial-equity audit plan similar to Apple’s.

Countless smaller companies have now “voluntarily” adopted racial-equity audits of their own to avoid the ignominy of embarrassment by a “shareholder” vote — a fate suffered by Chevron, Apple and Home Depot. 

Technically, these shareholder proposals are nonbinding — but corporate boards face obvious risks if they act in a manner that flouts shareholder proposals a majority of their “shareholders” support.

That’s part of the reason these companies bend the knee. 

Morality play 

Corporate boards and executives now see the writing on the wall — which helps explain why companies like Anheuser-Busch now grovel to be seen as one of the “good guys.”

The Human Rights Campaign, which publishes a “corporate equality index,” can then exert a similar effect on companies just as Follow This, SEIU, and Color of Change did on their respective targets. 

There’s another more cynical factor at work.

The newest trend in executive compensation is the incorporation of ESG (environmental, social, governance) factors into determining how CEOs and CFOs are paid.

A quarter of S&P 500 companies now pay their executives based in part on the achievement of ESG goals, from financial institutions like Bank of America to oil companies like Exxon to beverage companies like Coca-Cola. Scoring high on the “corporate equality index” is a nice way to score well on the “social” prong of an ESG assessment — and like normal humans, CEOs respond to financial incentives. 

This of course raises the question of why BlackRock and other financial institutions play this game of self-sabotage by steering companies to adopt harmful policies.

After all, don’t they make less money if they make companies perform more poorly?

Not quite.

In fact, they might make even more money from the greater fee streams they generate from blue-state pension funds — like CalPERS in California — that effectively demand that BlackRock, State Street and Vanguard adopt ESG agendas as a condition for investing money with them. 

It’s win-win 

So even if everyday Americans whose retirement accounts invested in these funds are left holding the bag, BlackRock itself still wins because it gets to manage more money from those large blue states — and to earn a greater fee stream in the process.

This isn’t the invisible hand of the free market guiding corporate behavior.

It’s the invisible hand of government itself. 

And voilà — welcome to the rise of acronymized capitalism in America.

ESG (environmental-social-governance).

DEI (diversity-equity-inclusion).

CEI (corporate-equality-index).

CSR (corporate-social-responsibility).

BlackRock wins.

Dylan Mulvaney wins.

The Chinese Community Party wins. 

Unfortunately, everyday Americans are left footing the bill as they rightly wonder what exactly happened — as their own dollars were used without their knowledge to create a country they didn’t vote for. 

Vivek Ramaswamy is co-founder of Strive Asset Management and a 2024 Republican presidential candidate.