DISNEY'S MOUSETRAP — For a while, maybe between the 2003 debut of “Queer Eye for the Straight Guy” and a doomed 2016 bathroom law in North Carolina, corporations had a free ride when it came to social issues. Companies extended benefits to lesbian and gay couples and won plaudits. They touted their environmental bona fides and won plaudits. They embraced racial and ethnic diversity and won plaudits. It was all sunshine and pride parades until employees, customers and investors started demanding proof to back up the promises — and conservatives started pushing back. Now businesses find themselves squeezed between progressive demands and point-seeking politicians who have the power to cause pain. Walt Disney Co. chose to lobby quietly against a Florida bill that would ban classroom discussions about sexual orientation or gender identity. It worked behind the scenes and refrained from public statements until late in the game, after LGBTQ employees and their allies protested that the bill would further marginalize their community. After Disney spoke up, Florida Gov. Ron DeSantis, a Republican and would-be presidential contender, doubled down. He signed the classroom bill into law, then claimed a pound of flesh, revoking tax privileges the state had granted Disney more than a half century ago. “You’re a corporation based in Burbank, California, and you’re going to marshal your economic might to attack the parents of my state?” DeSantis said. “We view that as a provocation, and we’re going to fight back.” How did we get here? Donald Trump was one tipping point. One might think that a $218 billion media behemoth with 80,000 Florida workers could call the shots in Tallahassee. But conservative backlash against environmental, social and governance issues — what the right calls woke capitalism — has become so fierce that even a mighty mouse armed with money and magic can’t win. The story was different less than a decade ago, when North Carolina crumpled to outrage after it passed a law that banned transgender people from using certain bathrooms that matched their gender identity. The NBA pulled its all-star game and Bruce Springsteen canceled a concert. PayPal Holdings Inc., CoStar Group, Deutsche Bank AG and Adidas AG canceled projects or ended talks with the state. Disney will survive the GOP’s wrath. Here’s why. ESG principles have risen to the fore in corporate boardrooms for a simple reason: They help the bottom line. “As people trust the government and institutions less, it’s become more important to them that companies take a stand on social and political challenges,” said Denise Dahlhoff, senior researcher at The Conference Board. Research suggests that companies have little to lose in the court of public opinion. People are more likely to buy a brand that aligns with their values, but much less likely to boycott one that doesn’t, Dahlhoff said. Last month, Citigroup said it would provide travel benefits to employees seeking abortions outside their home states “in response to changes in reproductive health care laws in certain states.” The move was a response to a new Texas ban on abortions after about six weeks of pregnancy. Salesforce Inc., Uber Technologies Inc., Yelp Inc. and other employers announced similar policies. Texas Rep. Briscoe Cain , a Republican, threatened to block Citigroup from underwriting municipal bonds in the state. His argument: that the bank's responsibility is to maximize shareholder returns, not "to divert shareholder resources toward ideological causes." Citigroup is holding firm. It’s nice to think that companies wear white hats because they’re good guys. Google does no evil, after all, and PepsiCo. stands with protestors, right? But let’s not be naive. At the end of the day, Cain is right: Executives have a legal duty to improve returns. What he's missing: Marketing to a growing population of progressive, young consumers is one obvious way to boost profits, whether the messaging is sincere or not. So when Republicans shake their fists and make threats, the end game is the same. Disney doubled down, too. It promised to ramp up LGBTQ and racial minority representation in its characters and stopped donating to Florida politicians, at least for the time being. Companies have chosen sides. There’s money to be made, and they can’t afford to be neutral.
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