Shareholder activists pressure brands on LGBTQ marketing

Conservative groups are filing more proposals implying that companies working with LGBTQ organisations could become the next Bud Light.

Bud Light suffered a damaging boycott last year. Picture: Patrick T. Fallon / AFP.

Conservative groups are increasingly asking company shareholders to scrutinise LGBTQ-themed marketing and public relations campaigns, hoping to open another avenue of pressure on businesses’ social positions.

Target, Mondelez and Dell are among companies expected to hold votes on such shareholder proposals soon, while others have already done so this year.

Still, getting a vote isn’t the same as winning it. Levi Strauss shareholders, for example, last month overwhelmingly voted “no” on a proposal that the clothing company create a committee to determine whether “public and politically divisive positions,” including its work with LGBTQ organisation Human Rights Campaign, had affected its financial sustainability.

And companies including Walmart and Verizon have argued successfully to the Securities and Exchange Commission in recent weeks that they don’t need to hold votes on the proposals at all.

However, the propositions are becoming both more numerous and better constructed. And they are drawing energy from the recent backlash to corporate diversity, equity and inclusion initiatives, often invoking the damaging boycott of Bud Light last year over a collaboration with a transgender social-media personality. Best Buy recently wound up making assurances to the authors of one shareholder proposal to head it off.

“The argument isn’t new, but the tactics are new and they’re amping them up,” said Sarah Kate Ellis, president and chief executive of LGBTQ rights group Glaad. Many brands have recently approached Glaad seeking advice on how to respond to these proposals, Ellis said.

National Center for Public Policy Research, a conservative think tank that owns shares in a range of companies, has nearly doubled the number of proposals it files each year to around 60 in 2022 and 2023 from about 30 in 2021, according to Scott Shepard, the group’s general counsel and director of its Free Enterprise Project, which writes the proposals.

“Our goal is to get companies to return to their fiduciary duties, which is to say, not to put the partisan policy preferences of executives or of the executives of the giant investment houses first,” Shepard said.

New twist on a long history Shareholders have long proposed measures advocating a range of social causes, including liberal priorities on climate emissions, plastic waste and racial justice. The results are rarely binding, but just holding a vote can spotlight company practices and create pressure to change.

Many of the conservative activist groups’ recent proposals have critiqued corporate diversity and sustainability efforts. These groups are driven, in part, by a belief that liberal interests have historically dominated shareholder activism, they said.

The proposals that target companies’ work with LGBTQ groups, and related messaging efforts, call those activities partisan and divisive, particularly when they touch on transgender issues.

National Center for Public Policy Research, or NCPPR, late last year submitted a proposal asking electronics retailer Best Buy to assess whether it was hurting its business through partnerships with and donations to various LGBTQ advocacy groups, such as Human Rights Campaign, that the proposal said advocate teaching “radical gender theory” to minors.

“Why are Best Buy shareholders funding the efforts to spread an ideology seeking to mutilate the reproductive organs of children before they finish puberty?” the proposal asked.

Such proposals are pushed by fringe actors and use “inflammatory, offensive and straight-up inaccurate rhetoric,” said Shawnie Hawkins, senior director of HRC’s Workplace Equality Program.

Best Buy convinced NCPPR to withdraw its proposal after the retailer’s legal counsel assured the group that it would screen future donations by its employee affinity groups to ensure they would not support the causes that NCPPR “identified as concerning.” The exchange was reported earlier by NBC.

Best Buy hasn’t changed its policy regarding LGBTQ advocacy groups, according to a spokeswoman. The company itself donates almost exclusively to one group in any given area, such as Human Rights Campaign in the case of LGBTQ issues, she said. Best Buy will continue to grant its employee affinity groups discretion in allocating their own donations, she added.

The retailer may not have put the matter entirely behind it, however. The Office of New York State Comptroller Thomas DiNapoli wrote Best Buy in April expressing concern that its response to the shareholder proposal could be seen as a departure from its “stated commitment to policies and practices that promote inclusivity and support for the LGBTQ+ community.” The comptroller’s office serves as trustee of the New York State Common Retirement Fund, which invests in Best Buy.

The comptroller’s office and the retailer are discussing the matter, according to their spokespeople.

The spectre of Bud Light Beyond filing proposals more frequently, these shareholder groups have also learned to narrow initiatives to better meet SEC guidelines and head off companies’ arguments that their practices are standard business operations, or that the proposals’ claims are misleading, said attorney Sanford Lewis, who has for decades represented shareholder groups including investment firms, pension funds and nonprofit organisations such as the Sierra Club Foundation.

“The conservative groups have gotten significantly better this year at navigating those rules,” Lewis said.

“They’re probably not going to get huge support for these things, but it gives them a platform in the media, essentially, and forces the company to debate the issue,” he added.

Mondelez is set to hold a vote this month on a proposal from the National Legal and Policy Center, or NLPC, a conservative organisation that describes its mission as promoting ethics in public life, asking the snack-food company to evaluate the risks and consequences of its associations with “external organisations.” The proposal focuses on marketing campaigns tying the Mondelez cookie brand Oreo to LGBTQ advocacy group PFLAG and lists positions from that organisation that it considers “militant,” including opposition to laws that would prohibit medical treatments for transgender individuals under the age of 18.

“It is critical the Board of Mondelez International focus on its own vulnerabilities before they become a liability,” the proposal reads.

Mondelez maintains careful protections against all risks, including those related to its marketing campaigns and affiliations with outside groups, according to a spokeswoman. The company recommends that shareholders vote against the proposal, she said.

PFLAG said companies that engage with the organisation “do so to ensure LGBTQ+ employees and their families are affirmed and valued.” NLPC ramped up its focus on shareholder proposals in late 2021, filing roughly two dozen annually in response to what it considered left-wing activity in the corporate world, said Paul Chesser, director of NLPC’s Corporate Integrity Project. The Bud Light boycott was the “crowning blow” of a broader reaction against such corporate activities, he added.

“We said to Mondelez, look, you know, it’s only by good fortune that you’re not Bud Light,” Chesser said.

None of the companies that have received proposals from NLPC have agreed to change their approaches to social-justice marketing or partnerships, but simply forcing them to listen is worth it, Chesser said. Attracting attention on social media might be the most important measure of success for these campaigns, he said.

“We’re doing it to make a point and also to, you know, raise the pain threshold for these companies who have embraced all this, this political agenda,” Chesser said.

The Wall Street Journal