Activism, BLM, Culture, Diversity, Social Media, Top Stories

Will Corporate Social-Justice Initiatives Be More Than Just a Fad?

On June 16th, PepsiCo officials tweeted the details of their newly launched “Journey to Racial Equality”—a multi-part $400 million campaign that includes everything from “mandatory unconscious bias training” to adding “100 black associates to our executive ranks.” Previously, the company marketed itself with sunny slogans such as “Joy of Pepsi,” “The Choice of a New Generation,” and “For Those Who Think Young.” But its modern corporate mission, as announced in 2019, is far more ambitious, and requires Pepsi to “integrat[e] purpose into our business strategy and brands whilst doing more for our planet and people.” And while it’s not clear how selling sugary drinks and salty, high-carb snacks serves any particular purpose (except high profits), the company promises that its recent announcements are “only the beginning. Over the next few years, we will expand our pursuit of racial and social justice in communities around the world.”

Though I’ve studied business ethics for over 20 years, I’ve never seen a social-justice plan quite like Pepsi’s. But given the lavish media attention on offer for corporations that make announcements of this type, I’m sure it’s just the tip of the iceberg. Capitalism is about responding to demands from stakeholders—customers, employees, suppliers, and other constituents who can impact your bottom line. Corporate leaders are now responding to the demand for social change—or at least the appearance of social change. And part of the package that consumers want is the sort of religious zeal that they have come to expect from friends and celebrities on their social media feeds.

The idea of “corporate social responsibility” has been around for decades. But it now has become more central to the self-definition of many businesses. Last summer, the Business Roundtable, a collection of Fortune 500 CEOs, inserted a moralizing tone in its updated statement on the purpose of a corporation—an explicit rejection of the idea that companies should be agnostic about their purpose within society. With signatories like Amazon on board, such declarations are bound to arouse skepticism. But even the fact that large corporations feel the need to pay lip service to social-justice principles is notable. Clearly, we’ve moved away from the so-called “Friedman maxim”—that the social responsibility of business is simply to increase profits.

While we think of corporate social purpose as a progressive concept, it’s notable that many religious conservatives have embraced it, too. The mission statement of the fast-food chain Chick-fil-A, for instance, describes its corporate purpose as being “to glorify God by being a faithful steward of all that is entrusted to us and to have a positive influence on all who come into contact with Chick-fil-A.” Adherence to Christian principles has meant not only that Chick-fil-A has taken controversial positions on marriage and LGTBQ issues; but also that its restaurants remain closed on Sunday, a costly move given the eating habits of most fast foodies. One might expect companies to find their bottom lines suffer when they embrace principles that limit their market appeal or invite boycotts. Yet, Chick-fil-A continues to experience impressive growth and success. And among progressive-tilting companies, data described recently in Quillette showed no negative effect.

One important distinction is that Chick-fil-A is a closely held company that has reflected its owners’ religious values from the time of its founding. Pepsi, on the other hand, is the corporate equivalent of a born-again parishioner. And there is a certain manic quality to its announcements, some of which don’t seem as if they were thought through. “Unconscious-bias training,” in particular, is a questionable exercise that has failed consistently in bettering workplaces since the 1960s. (And the science behind it has recently been shown to be flawed.) Pepsi says it wants to more than double its spending on black-owned suppliers, and build out black-owned supplier capability. But if this is simply a zero-sum initiative that requires Pepsi to abandon its historic supplier relationships, while outbidding local companies that had previously been served by minority-owned businesses, it’s not clear how this furthers social justice.

Even putting aside the details of implementation, it’s odd to observe corporate officers become sudden evangelists for a popular cause—especially in the case of a company such as Chevron, which has been accused of polluting and harming black communities. Its executives now publicly share their thoughts on the Black Lives Matter movement as if they had spent their whole careers focused on social justice instead of pumping oil. This includes vague but fashionable word salad about the “learning journey” they’re supposedly taking. “Advocate for the outgroup when you are part of the ingroup,” says Lee Jourdan, the chief diversity officer. “Just like with safety. If you see it, own it. If you hear it, speak it. Advocacy carries with it a dimension of credibility that self-advocacy does not.”

“As I reflect on all that is happening, I take courage today from a few things,” added Executive Vice-President Jay Johnson in the same curated batch of publicly released Chevron quotations on “racial injustice and discrimination”: “Lee’s observation that we are all on a learning journey; that our company encourages us to take that journey together and that so many of you are willing and thoughtful teachers whose examples eloquently challenge us to live by the values in The Chevron Way.” (As demonstrated by a recent Reuters article titled “Chevron diversity ratio to improve as layoffs progress,” many ex-Chevron employees are on the same “learning journey,” too, albeit involuntarily.)

All of this represents something of a revolution in business ethics, which once was focused primarily on context-specific trade-offs in capitalist exchanges—the treatment of workers in poor countries, for example—as opposed to individual executives announcing fealty to distinct formulations about our society and its inequities. In part, this is a result of the modern hyper-focus on branding, as well as the requirement that corporations remain popular (or at least less unpopular) with the young internet mobs who now can crowdsource boycott campaigns. Unlike television commercials and billboards, woke tweets are free. While Pepsi stands out for announcing concrete dollar figures when it comes to helping black workers and suppliers, the vast majority of social-justice-posturing companies offer little except bromides. Where cost-benefit calculations are concerned, the benefits may be questionable, but the costs usually are certainly low.

Notwithstanding the global downturn of 2020, many of the other issues that typically have concerned corporate officers have faded somewhat over the last decade. Specifically, financial capital stopped being a scarce resource, due to a combination of governments printing money, sustained low interest rates, and a deep-pocketed cohort of international billionaires. When cash was scarce, the most important stakeholders were investors and bankers—the gatekeepers to capital. When cash is abundant, the most important stakeholder is the “community” (as it’s defined on any given day) and the high-value employees who, often being products of liberal schools, are most likely to choose employers that publicly embrace progressive values. The largest companies, such as PepsiCo and Chevron, are also the ones that can afford to staff diversity and equity departments with well-paid executives, and spend tens of thousands of dollars so that equity-industry consultants and best-selling authors (Robin DiAngelo being the current favourite) can fly in for one-off lectures about how racist they are.

One brilliant equity-industry innovation has been to frame the debate about diversity around the concept of “compliance”—thus tapping into pre-existing corporate sensitivities in regard to environmental, financial, and workplace regulatory regimes. And the rapid growth and power of this new industry reminds me of the way that credit-rating agencies embedded themselves into our financial backbone leading into the crisis of 2008. By branding themselves as “agencies” (which suggests studied objectivity) and not profit-seeking corporations (the reality), everyone was made to imagine that they were simply there to serve the public good.

During a recent presentation made to faculty by equity administrators at my own university, for instance, we were told that the Canadian Charter of Rights and Freedoms, the Ontario Human Rights Code, and the Ontario Policy on Accessible Education are all so complex that no non-expert could possibly navigate their provisions. The equity question wasn’t one of ethics, you see, but one of compliance. And once experts are brought in to ensure compliance, it becomes difficult to reject their counsel—especially for the decision-makers who brought them in to begin with. Moreover, the message they offer businesses is always presented as urgent. Leading antiracist theorist Ibram X. Kendi, in particular, tells us that “patience” is a dirty word “to those incarcerated by inequity. Patience is a nasty word to those with injustice kneeing down on their neck.” And so a company such as PepsiCo, which spends 10 years rolling out a new kind of Frito Lay potato chip, will announce, in one manic outburst, a dozen new policies that will fundamentally alter its staffing and logistical practices.

Consider the example of Bank of America, which tweeted in the days after Floyd’s death that “the events of the past week have created a sense of true urgency,” one that motivated the company to commit $1 billion to “assisting people and communities of color.” This is a bank, remember, that barely survived the past few economic crises, including a subprime crisis that was rooted, in large part, in loans made to disadvantaged borrowers. But such are the ways of corporations in this new era, when cash is common, and brand is king.

What all this means for the future of capitalism is unclear, since the entire basis of the capitalist system is the expectation that economic actors will act on self-interest (broadly defined to include the long-term benefit of healthy relationships with stakeholders) while the government and civil society tend to needs that can’t be (or aren’t) served by market forces. As noted earlier, modern corporations have generally leavened their profit-seeking activities with at least some regard for business ethics. But it was always taken for granted that these ethical concerns acted in constraint on the principal mission of the corporation—and this mission inspired a unique path for the company to take that would ultimately enrich shareholders. What’s different now is that the current strain of social-justice ideology presents itself as a totalizing creed—which means that it isn’t enough for CEOs to accede to the idea of social justice as a mere boundary check on the company’s profit-seeking activities. Social justice must now appear to be at the center of corporate operations—which creates the absurd paradox of junk-food companies telling the world that what they’re really trying to do is improve humanity.

Ideological trends are unpredictable. Just a few decades ago, remember, American companies were all seeking to align themselves with “family values.” And even today, we’ve seen companies push back against “community” demands for purely symbolic changes to their product lines. (That includes Trader Joe’s refusal to re-brand its products, deferring instead to the established decision-making processes that have served the company well.) So the long-term prognosis on woke capitalism is unclear. But in the short run, the companies that succeed likely will be those that balance short-term messaging against long-term business interests and established corporate practices.

Consider the news that IBM had decided to cease investment in facial-recognition software, a development that became part of the recent BLM news cycle. CEO Arvind Krishna even sent a letter to Congress stating that “IBM firmly opposes and will not condone uses of any technology, including facial recognition technology offered by other vendors, for mass surveillance, racial profiling, violations of basic human rights and freedoms, or any purpose which is not consistent with our values.”

But, as Christopher Padilla, VP of Government and Regulatory Affairs, explained: “It was not like the clouds parted and suddenly we decided not to do facial recognition. IBM has been thinking about this since 2014 when questions around this topic of ethics in AI and government arose from the revelations from Edward Snowden.” And indeed, it turns out that IBM officials had spent years thinking about the issue, and had staked a position that had mass buy-in within the company. Yes, there is an economic opportunity cost to taking such a position, but the process leading to that position was deliberative, and was more in line with traditional business-ethics analysis than the policy-by-tweet practices on display at other companies.

Much of what I say here will be seen as dismissive of social-justice concerns. But there is a difference between social justice itself, and the social-justice postures of corporations (and I don’t just mean when it is cynically applied green/pink-washing). Moreover, I would ask committed social-justice activists if, in formulating policies that advance their cause, they really want to act as fans and apologists for a billionaire corporate class that, freed from the need to husband cash and capital, now preens as an agent of social change. Activists have long been skeptical of corporate propaganda. And the need for such skepticism remains one of the few constants of our age—especially if the motivations of these executives are sincere.

 

David Weitzner is an assistant professor of management at York University. His books include Fifteen Paths: How to Tune Out Noise, Turn On Imagination and Find Wisdom; and, forthcoming from University of Toronto Press, Connected Capitalism. Follow him on Twitter @WeitznerDavid.

Comments

  1. “The New Pepsi… Half the sugar, twice the justice, same great taste”

    or how about something less “flashy” and “keeping it real” like…

    Pepsi! Sickeningly Sweet Social Justice in a plastic, single use bottle

    or maybe

    Pepsi! “We don’t just sell shit, we give a shit”

    or perhaps…

    Pepsi! We’ll piss away money on social campaigns while you piss away money on the piss we make…

  2. @quillette: “Advocate for the outgroup when you are part of the ingroup,” says Lee Jourdan, the chief diversity officer [at Chevron].

    It was about time! Finally, all employees are asked to stand up for conservatives and other non-woke people who form the outgroup in today’s liberal-dominated companies, media and universities.

    Oh wait - did he mean that at all?

  3. A good article, with some very interesting source materials. Of particular interest was the Harvard Business Review article titled Why Diversity Programs Fail. To cut a long story short, it’s because they rely on the selfsame methods of force and coercion by social means, to achieve their aims. Surprise, surprise, The Tyranny of Others does not work.

    What does work is voluntary participation in college recruitment programs targeting women and minorities: Our interviews suggest that managers willingly participate when invited. That’s partly because the message is positive: “Help us find a greater variety of promising employees!” And involvement is voluntary: Executives sometimes single out managers they think would be good recruiters, but they don’t drag anyone along at gunpoint.

    Another example is voluntary participation in mentoring Georgetown’s business school dean David Thomas discovered in his research on mentoring, is that white male executives don’t feel comfortable reaching out informally to young women and minority men. Yet they are eager to mentor assigned protégés, and women and minorities are often first to sign up for mentors.

    Of course the article also recommends Diversity Managers and Social Accountability, with the latter being a process by which pay raises by group are published, but ironically this form of approach can backfire (from certain perspectives), such an when Google discovered they were systemically underpaying younger White and Asian male engineers. Both approaches would seem to be a reversion to the idea of using some form of external force, or negative social coercion to achieve their aims, even if they prove more successful than the standard DIE methods.

    But generally it would seem that systems which favour positive social rewards, building upon our natural human tendency to crave status and reciprocity, achieve positive results. Methods which favours meritocracy, encouraging individuals to adopt a broader approach to recognising talent, seem destined to succeed. It’s such a shame, because the methods of the modern social justice warrior, indoctrinated in the new religion of critical theory, are the exact antithesis of the methods one would choose if one wanted to achieve real social justice.

    Their methods are to censor, shame, dismiss and fire, squeezing out viewpoint diversity and often enacting a very modern version of the Struggle Session in the process. They seem to believe, mistakenly, that all change can only come through political struggle, when if we look at the historically disadvantaged American Irish community, it was exactly at the point that they abandoned political representation in favour of individual effort that the real progress began.

    It would seem that the recent history of Diversity Programs proves beyond all reasonable doubt, the axiom that used to be at the heart of our civic discourse- that progress is always best achieved when individual liberty and voluntary exchange are enshrined in our culture. Only when we ensure that these methods rely upon voluntary participation, understood as a means of demonstrating laudable social merit, will Diversity programs be up to the job of the mammoth task of the job before them. Only when they are articulated as a means of aiding meritocracy, rather than replacing it with an arbitrary bureaucracy, will Diversity programs stand a chance of succeeding in the long-term.

  4. Agree with you, Jake_Dee, if these corporation try to apply the Social-Justice Initiatives that is being pushed here in the US I see a great big problem for these corporates in many of the natonion of the world. I have also seen those who are pushing Social_Justice here in the US are only interested in one direction and are willing to use force (financial and social pressure and other force) to make those who do not agree with the people who are attempting get this “Social-Justice” (their form of it) made in to federal and state law with sever penalties.
    Here is a very short (not complet) that I don’t agree with:

    1. Reparations for slavery I have had nothing to do with slavery and yet they want me to pay for what in many cases the elders of the native tribe sold to the slave traders their people as slaves. Then the white people spent many lives in freeing form slavery here in the US and and Europe (Western Nations). While the nations where these slaves came from even after they shook off the white nations that had controlled them had slave both black and white for many years, and some may still have even though it might not legal.
    2. Allowing people demonstrating the deaths of black young men at the hands of police a pass on much of their lawlessness in the “peaceful” demonstrations. While these same people that are demonstrating these deaths of young black men at the hands of police pay no attention to the deaths of young black men and women and even children at the hands of other young black men. The answer to these death at the hands of police (including when the police officer is black) will not be found in demonstrations. The answer will only be found within the community itself. It is the action that these young black man do in the community (killing each other etc and committing crimes against other) and when in the custody of police that causes their death at the hands of police. This is the reason that the black man represents a greater percentage of prison population that its national population would normally provide. Anecdotal evidence is look at the majority of the reports of murder as reported in the nation. The vast majority are black on black crimes with a few of these reports of black on white. The vast minority are white on black or white on white crime.
    3. Another area I disagree with is violations of gun laws. In many states and cities a person can (and in some cases does) get a more severe prison sentence for just possession of an unregistered weapon that a person who commited a crime with an unregistered weapon. In the crime commited with an unregistered weapon the DA pleas down the gun law violation or throws it out if the person will confess to evern a reduced charge of the crime that they committed.

    I am for equal justice before the courts for all. I know that that cannot always be but it can be a goal. I also that a person should have the same opportunity in this nation to advance as far as their ability will allow the. But this starts in the community where the people leave. When the residents of a community their young people will be better prepared to meet the challenges to be overcome to get the success that the individual. Public education is one half of the root of this problem and the other half is the is the home and family. If these communities had the option to have charter schools all education would improve. The state schools would have to do better in educating the students or they would go out of business. But the education union DOES NOT WANT THAT TO HAPPEN. Because of the union resistance the democrat which depends on union will not allow charter schools in areas that need it the most.
    There are just a few that could be mention and there many more!

  5. I guess I’m a glass-half-full guy today, but if everyone who disagrees with these political campaigns stopped drinking carbonated sugar-water in protest, we’d be collectively healthier. Go Pepsi.

  6. What I hear you saying is that real change is only achieved through ‘inside-out’ thinking, as opposed to coercive, ‘outside-in’ enforcement. A ‘change in heart’ leads to better outcomes, which is voluntary - trying to impose outcomes externally is doomed to failure in the historically proven dust bin…

    In the Christian world view, the ‘inside out’ teaching is emphasized, and is built in to the foundation of the teachings of how you are to live in the world and are to treat others. A changed heart changes actions. The work begins with YOU (I mean, ‘me’ of course). The ‘religion’ of the far-left doesn’t have that ethos wired in - so the only solution is overpowering the unenlightened…

  7. We who are not employees of Pepsi, Coke, Chevron, Gillette, Disney, pro-Sports, etc., cannot be coerced into supporting this postmodernist garbage. We - the customers who pay for all this stuff - are free to spend our money as we see fit.

    I now keep track of these woke companies (on my fridge beside my shopping list) and will no longer purchase their products. There are substitutions and some of these products can be made at home. If not, I will learn to do without. It’s imperative that we push back.

    Some talented media person should make a pdf list of these woke companies that we can download and print. After a while not purchasing their products becomes second nature.

  8. Something else to consider:

    Data from the National Health and Nutrition Examination Survey, 2005–2008

    • Males consume more sugar drinks than females.
    • Teenagers and young adults consume more sugar drinks than other age groups.
    • Approximately one-half of the U.S. population consumes sugar drinks on any given day.
    • Non-Hispanic black children and adolescents consume more sugar drinks in relation to their overall diet than their Mexican-American counterparts. Non-Hispanic black and Mexican-American adults consume more than non-Hispanic white adults.
    • Low-income persons consume more sugar drinks in relation to their overall diet than those with higher income.
    • Most of the sugar drinks consumed away from home are obtained from stores and not restaurants or schools.
      [emphasis added]

    https://www.cdc.gov/nchs/products/databriefs/db71.htm

    Put another way, black Americans, the objects of Pepsi’s new social justice policies, have been drinking, and paying for, a lot of Pepsi products, as well as other sugary soft drinks.

    This has all been targeted marketing.

  9. The biggest companies are well positioned to pick off the small proportion of female and colored talent that is in the same ball park of competence as the white incumbents. Hence, imposition of such standards and principles will enhance their competitive advantage over mid sized rivals, who will be left scraping the barrel to fill the quotas.

    It isn’t true that women and blacks are being left out because of prejudice. It is a lie. This is the heart of the matter. Social justice is a spurious concept. It has nothing to do with justice. It has to do with bias, discrimination and privilege. It aims to institutionalize bias, discrimination and privilege. It aims to create a caste society.

    There is only so much sand that can be thrown in the gears of American enterprise before the engine of American power falters, stumbles and breaks. We do not wish for American enterprise to become un-competitive in relation to its global rivals. We do not wish to expend military power to maintain their market position. They must do it by being the best----this is what they have done, still do, and must continue to do.

  10. As demonstrated by a recent Reuters article titled “Chevron diversity ratio to improve as layoffs progress,” many ex -Chevron employees are on the same “learning journey,” too, albeit involuntarily.

    Translation: White males are being fired at a disproportionate rate, regardless of their merit, in order to balance the ratios. This is discrimination.

  11. Let’s actually print that abstract for everyone to read:

    Hypercapitalism is a term used by Marxist scholars, in their continuing critique of political economy, to depict a relatively new form of capitalistic social organization marked by the speed and intensity of global flows that include exchange of both material and immaterial goods, people, and information. Hypercapitalism, sometimes referred to as corporate capitalism, is blamed by critical scholars for causing misbalance and fragmentation of social life by allowing commercial or business interests to penetrate every aspect of human experience. In other words, critical scholars believe that once‐separate spheres of culture and commerce now overlap and, in return, culture and the way of life in a hypercapitalist society becomes subsumed by the commercial sphere. In addition, critical scholars believe that this new type of capitalist system has moved toward an extreme laissez‐faire capitalism that is marked by greed, selfishness, destruction, wars, and exploitation. Harman (2009) explains that, since the 1980s, a push for deregulation has allowed for a free flow of capital with little or no regulation and opportunity for intervention from governments. He believes that this very process of deregulation and expansion of neoliberal economic visions, which is masked as globalization, has led to a deviant form of capitalism that he calls “zombie capitalism.” Hypercapitalism can also be linked to the term “late capitalism,” which was originated by Jameson (1990) who linked particular economic processes to postmodernism. In his work, he linked the cultural shift from modernism to postmodernism to the shift to a capitalist system that is marked by fragmentation and alienation.

    Would it make you feel better if I called it Marxist word salad? It is an attempt to scandalize and sensationalize the unremarkable in service of the Marxist worldview. It is far removed from reality.

  12. Your post is subtle and nuanced, and to a certain extent I would tend to agree with you. Many on the Left now recognise that Socialism has never and can never work. However, we still have the problem that many on the Left want to rob or deplete the market’s ability to allocate capital. Case in point Elon Musk recently managed to achieve with $1 billion with SpaceX, what it would normally take Government $36 billion.

    This is not unusual for billionaires, or even higher end multi-millionaires- they succeed because they are able to achieve with capital, what others cannot. Whilst at least some taxation is advisable, it is a big mistake to attempt to deplete their stock of working capital- because they can succeed where Governments never will. Of course, there are exceptions. Rent-seeking occurs at every level, and there is an extent to which modern financial systems can represent an exploit to those with enough understanding and capital- but the small number of rent-seekers are far outweighed by the achievements of the more productive entrepreneurial class.

    There are many reasons why Thomas Piketty was wrong. Some have disputed his figures. Others have queried the arbitrary period he chose to look at, with an adjustment necessary for the structural tilt towards labour in the Keynesian post-war period. But the biggest flaw in his reasoning is that if I am poor or middle class, it shouldn’t really matter whether wealth inequality grows- the only thing that should matter to me, is whether my income increases in real terms and whether my material standard of living has risen. Everything else is envy and resentment. The other problem is that economic analyses on inequality should always be run after taxation and economic transfers, otherwise we don’t have an accurate picture of what the analyses mean, in real terms.

  13. And? A sewer system is not a natural monopoly.

    It can seem like one, but only because we have gotten used to the city “owning” the whole system. That’s not “natural”, that is an entirely artificial monopoly. Let’s return to the town of Paradise, Nevada.

    Paradise is an unincorporated town, built from scratch by the casino, hospitality, and entertainment corporations that make up most of its economy. (People think it is Las Vegas, but actually all the famous “Vegas” destinations are in Paradise, not Las Vegas proper). Paradise businesses successfully resisted incorporation, which meant not paying city taxes but also being 100% responsible for everything on their own. How do they do utilities? Easy. They built them themselves.

    A sewer consists of main, shared pipes, and a connection to each property. In Paradise, the local landowners (hotels, casinos, etc.) built the system. They individually own the connection to their property, and own a share in the main lines. This means that the customers of the sewer are also the owners of the sewer, and so no “monopoly power” can be exerted over them.

    These owners then elect a board to oversee their property (i.e. the sewer). This board hires technicians to service the sewer. Since there is no monopoly on sewer technicians, the sewer can work 100% private with no monopoly involved.

    The advantage in this, over having a city government do it, is that problems with the technicians can be dealt with quickly and wasteful spending spotted and corrected as it happens. You don’t have to wait for an election to force change, as shareholders can, at any time, contact each other and get the board fired. The board knows this, and so they take more care to keep it efficient. Furthermore, since the sewer managers are separate from the power line managers and the road managers, they never have the agonizing choices that we have at the municipal ballot in having to choose between two candidates that are each good for one thing, but bad for another.

    The owners chose this arrangement freely, vigorously resisting having a municipal government forced onto them when the city of Las Vegas tried to annex the territory, because they saw it is better for them to own and manage utilities this way than to have all of it bunched together under one roof, controlled by a bureaucracy not directly accountable to its customers.

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