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Companies That Embraced Social Issues Have Second Thoughts

"This has been a "no-win" strategy for many companies and sports teams. Remaining neutral seems to be the best decision." - IGRE

A display at a Target in San Francisco on May 31.JUSTIN SULLIVAN/GETTY IMAGES

Executives rethink if and when to weigh in on potentially divisive issues, fearing backlash from all sides, and develop crisis plans in case things go wrong.

In May, clothing company The North Face released a video for Pride Month featuring drag performer Pattie Gonia. The ad was similar to the one the performer appeared in for the outdoor-apparel maker a year earlier. The reaction was not.

Within hours, calls for a boycott of the company spread on social media. “The North Face wants to be the next Bud Light!” one user wrote. “Aren’t you supposed to learn from others’ mistakes?” another user said.

CEOs spent the past few years adjusting to a world in which investors, customers and employees expected corporate leaders to align themselves with social causes. Today, that has made companies targets in the U.S. culture wars, where one step can turn a social-media storm into a corporate crisis that cripples businesses and wrecks careers.

Some CEOs are rethinking how—or whether—to weigh in on sensitive political or social matters, with trans and other LGBT issues particularly in the spotlight.

At PPG Industries, a Pittsburgh maker of Glidden paint, coatings and other products, Chief Executive Tim Knavish asked senior leaders at the company earlier this year to review its processes for engaging on polarizing topics. So many political and cultural issues have ensnared companies, Knavish said, that he wanted the company to have a robust plan should it need to respond.

“There’s no pure algorithm to put all this stuff in a spreadsheet to tell you what to do,” he said.

PPG uses an internal scoring system to determine if, and when, it makes sense for the company to comment on matters that may offend some of its customers and employees or affect its brands. Senior leaders, including representatives from the legal department and human resources, meet regularly to discuss the pros and cons of taking a position. If executives do decide to comment, they then discuss how best to communicate. Knavish said he re-examined an older evaluation process the company used in light of recent blowups.

“We run a business. We don’t run a political organization. We don’t run a religious organization, and we don’t run a social organization,” Knavish said. “However, [we] recognize that we operate in a society. We hire employees with opinions and views. We work with customers that have opinions and views. So we have to take all that into account.”

Leaving everyone unhappy

Executives are finding out how easy it is to leave everyone unhappy. After a Bud Light promotion with a transgender social-media influencer sparked a boycott of the beer, the brewer put two marketing executives on leave and still took a hit on sales, while also rankling employees and supporters of the LGBT community. Days after Target’s LGBT retail displays sparked a social-media backlash and confrontations between store visitors and employees, the company said it would remove certain items and move some displays to less-visible locations, drawing criticism from LGBT supporters.

Police officers outside a Target as people protested across the street on June 1 in Miami. PHOTO: LYNNE SLADKY/ASSOCIATED PRESS

Over the past decade, companies have become more vocal on causes such as immigration, voting access, abortion, gay rights and racial equity, often taking stances shared by progressives. Many executives said they felt pushed by employees or customers to express an opinion on issues rippling through society.

What is changing now, executives and corporate advisers said, is that conservative groups and political leaders are pushing back against companies more forcefully. Consumers are also more openly expressing frustration that companies are airing views in ways some don’t welcome.

“The divisiveness in the country—the ‘woke’ discussion—it’s got more teeth, it’s got more anger I think than anybody really anticipated,” said Jim Fielding, a former chief executive of retailer Claire’s Stores and a former president of Disney Stores who is now an executive at the media company Archer Gray.

Series of questions

At Upwork, which operates a marketplace for freelance workers and other professionals, Chief Executive Hayden Brown said she and her leadership team have developed an internal rubric over the past three years that has proven helpful in determining how to handle delicate issues.

The company considers a series of questions when deciding whether to weigh in: “How central is this topic to our business, to our customers? Does it really concern them? Would they expect us to be opining on this because it really intersects with their day-to-day lives?” she said. “We don’t think it’s our job to opine on everything. But at the same time, it’s not our job to stay on the sidelines, either.”

Brown took the CEO job in January 2020 and said her entire tenure has been marked by such decisions, resulting in the company commenting on race after the murder of George Floyd and on Russia’s invasion of Ukraine.

Chief Executive Hayden Brown of Upwork spoke at a conference in 2022. PHOTO: DAVID SWANSON/REUTERS

Transgender rights have become a lightning rod for some conservative activists and politicians. More than 500 bills have been proposed or passed in state legislatures so far this year, often related to restricting gender-based medical treatments for children and adults or limiting transgender athletes’ participation in sports. Some school districts have also banned books with transgender themes.

Despite the growing acceptance of LGBT rights and legalization of same-sex marriage in many countries, including the U.S., companies still grapple with antigay sentiment at home or internationally. In Malaysia, police officers in May raided stores owned by Swiss company Swatch and confiscated LGBT-themed watches with rainbow elements.

The Los Angeles Dodgers experienced an outcry in May after the baseball team invited, then disinvited, a community-service and drag group known as the Sisters of Perpetual Indulgence as part of its LGBTQ+ Pride Night.

In a letter to Major League Baseball Commissioner Rob Manfred, Florida Sen. Marco Rubio, a Republican, objected to the invitation, saying that the Sisters have “mocked and degraded Christians, and especially Catholics” in part because they dress as nuns. After criticism from LGBT groups and supporters, the Dodgers re-invited the Sisters of Perpetual Indulgence, a decision that then brought pushback from some religious MLB players, who echoed Rubio’s sentiments.

The experiences are reshaping conversations among executives as they enter Pride month, the annual June celebration of LGBT culture and communities that has become a fixture of companies’ marketing calendars. Some companies are developing crisis plans should they encounter social-media attacks on policies or marketing efforts, executives and corporate advisers say.

“It’s not the end of LGBT marketing. It’s the end of amateurism in LGBT marketing,” said Fabrice Houdart, who consults with Fortune 500 companies and directs an organization for LGBT board members. He said senior leaders should consult with marketing, legal and communications teams, and also with employee resource groups, such as an LGBT employee group, along with human-rights advisers, if they have them.

A Los Angeles Dodgers Pride promoter at a parade in West Hollywood on June 4. PHOTO: DAMIAN DOVARGANES/ASSOCIATED PRESS

“I can see that my clients are more cautious,” he said. “But none of them have said ‘I’m going to change my strategy or roll back what I’m doing.’”

Many executives say quietly they are tired of being pulled into divisive topics and would prefer to avoid them. But many said it is unrealistic for a company to say it will never comment on a social or political matter. PPG said it would wind down its business in Russia following the invasion of Ukraine last year.

“Saying completely: ‘No, I’m just going to run a business,’ is not an option,” said Knavish, the CEO.

‘We don’t want to be next’

The consequences for expressing a view appear to be escalating. After Walt Disney Co. criticized a Florida law last year limiting the teaching of gender identity and sexual orientation in schools, the company became entangled in what is now a legal fight with Florida Gov. Ron DeSantis and his allies.

Companies are also facing pushback on some old initiatives. Some social-media users condemned Chick-fil-A in recent days for including a page on its website spelling out its commitment to creating “a culture of belonging” and for promoting an executive to the role of vice president of diversity, equity and inclusion—even though he was promoted in November 2021.

A website called Southwoke takes aim at Southwest Airlines and its policies, some of which are widely used corporate diversity efforts that have been in place for years. A mock letter on the site notes: “Here at Southwoke, we’re fully committed to DEI, ESG, LGTBQ+, BLM, BIPOC, Allyship, #MeToo and every other trendy woke acronym or hashtag you can think of.”

Southwest filed a complaint against the website, whose creator is anonymous, though an arbitrator found it to be a parody. The airline intends to continue with its annual plans to acknowledge Pride Month and diversity within the company, a Southwest spokeswoman said. “The expressions on [the Southwoke site] do not align with what we stand for as a Company, and the content includes hurtful images and language,” she said.

Some executives and corporate advisers said they have received calls or emails from executives at consumer brands asking for guidance on how to navigate the current climate.

Fielding, the former Claire’s CEO, who has written a memoir about his career as a gay executive, said he encouraged companies to keep their commitments to gay rights and social activism.

He acknowledged executives feel that no matter what they do, they are bound to upset some portion of their customer or employee base, he said.

“In most of these C-suites, they’re like, we don’t want to be next, but if we’re next, how are we going to respond?” Fielding said. “We’re such a divided country right now.”

Rob Smith, founder and chief executive of The Phluid Project, a brand of gender-neutral clothing that is sold at Target, Macy’s, Sam’s Club, Nordstrom and other stores, said none of his corporate retail customers have pulled or reduced their orders in response to the latest firestorms. Sales of Phluid clothes and accessories will double in 2023, and potentially triple in 2024 based on advance orders, he said.

“Selling is better than it was last year, which is really incredible. So I feel optimistic,” he said. “There’s never one customer for a beer, there’s never one customer for Target. It’s many segments.” In recent calls for boycotts, he added, “There’s a small group of people focused on one company and they made a lot of noise.”

At The North Face, the company kept up the video with Pattie Gonia, whose name is similar to a North Face competitor, despite the backlash. Comments below it are disabled on Instagram.

An image from a 2022 North Face video featuring drag performer Pattie Gonia.

“The North Face has always believed the outdoors should be a welcoming, equitable and safe place for all,” a spokeswoman for the brand, a unit of VF Corp., said in a statement.

For many executives, avoiding the spotlight is the preferred outcome. Bob Parsons, founder of Parsons Xtreme Golf, a high-end golf equipment brand, said he tries to say as little as possible on social media or elsewhere about political matters. “Both Republicans and Democrats—far left, far right—all buy golf clubs,” said Parsons, who also founded the online registration company “Why hit the beehive with a stick?”

By Chip Cutter and Lauren Weber

for The Wall Street Journal - June 6, 2023 12:01 am ET

Alison Sider contributed to this article.

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