Why do corporations go woke? And can we do anything about it?
Part three of a five-part series on my departure from iHeartRadio/Bell Media
At this point, it’s hardly even a debate that many big corporations have gone woke. What’s worth arguing over is why, and what we do about it.
Larry Fink, CEO of BlackRock, is one of the most influential business leaders in the world. His recent rejection of the term “woke” is really just a matter of semantics. Fink champions a brand of capitalism (stakeholder capitalism) that is political in nature.
Stakeholder capitalism insists that big corporations ought to engage in social activism and not be limited to the traditional purpose of business: earning profits for shareholders. Former Unilever CEO Paul Polman has urged us to accept that stakeholder capitalism is a sign of the times. “Today, staff and customers believe [business leaders] should embody the company’s values and speak out on big, touchstone issues, from race to fake news and climate change.”
The World Economic Forum is all-in on this approach to using corporate power. CEO’s from some of the world’s largest businesses have also publicly jumped on board.
Many readers will likely be supportive of corporations having what’s called a “social purpose” or taking on “social responsibility.” It sounds nice, especially if it means businesses are being mindful of pollution or other environmental degradation. But a growing number of politicians, intellectuals, and business leaders are arguing that it’s bad for our democracies when the richest people in the world use corporate power to pursue an unelected and unaccountable political agenda.
Vivek Ramaswamy, founder of the biopharmaceutical company Roivant Sciences, is ringing the alarm bells about stakeholder capitalism's consequences for democracy. “Speaking as a CEO and a citizen,” Ramaswamy wrote in the Wall Street Journal, “I don’t want American capitalists to play a larger role in defining and implementing the country’s political and social values. I think the answers to these questions should be determined by the citizenry—publicly through debate and privately at the ballot box.”
On this point, National Review’s Andrew Stuttaford agrees. Stuttaford makes the distinction between political objectives that are connected versus unconnected to “the economic objectives of those businesses.” He believes it’s “a threat to the democratic order” if CEO's pursue political objectives that are unconnected to their company's economic objectives “on any reasonable reading.”
One of the problems with stakeholder capitalism, however, is that it’s not obvious what would be deemed a connected versus unconnected political objective. Stakeholder capitalism essentially gives businesses a blank slate to define who their “stakeholders” are and what the company’s responsibility is to those groups. A business could define its stakeholders as the local community and take action to support local food banks and homeless shelters.
In my view, materially helping your neighbours is very different from the type of capitalism that leaders like Fink or Polman are advocating for, which includes using corporate power to potentially change how we think and talk about key issues like race, identity, and patriotism. Supporters of shareholder capitalism would likely treat both sets of objectives the same way, yet Fink and Polman’s approach to “social purpose” is much more political in nature because it stands to impact how our democracies function, or don’t.
BCE Inc. is stakeholder capitalism in action
If you've been following my Substack series, it may not surprise you to learn that Fink’s BlackRock is a significant shareholder in BCE Inc., the parent company of my former employer, Bell Media. In 2021, BCE Inc. was listed as one of BlackRock Canada’s “top holdings.”
A read through BCE's 2021 proxy circular (a communication to shareholders) suggests that BCE is practicing a form of stakeholder capitalism that resembles what Fink publicly champions. Interestingly, the proxy circular includes a withdrawn shareholder proposal that inquired about BCE’s "social purpose." BCE’s response to the withdrawn proposal focused on the business activities of the company and their social relevance. However, elsewhere in the document, BCE does allude to a social purpose that’s worth examining closely.
To its shareholders, BCE states, “In 2020, Bell committed to taking meaningful actions to address the impacts of systemic racism on blacks, indigenous and people of colour at our company and in our communities.” This section of the company’s proxy circular, titled “why diversity and inclusion matters,” is revealing.
Systemic racism is one of the most loaded political terms in Western democracies today. It sharply divides countries on partisan, cultural, and ideological lines, because many readings of the term insist that Western democracies are racist. BCE doesn’t just apply the term to its own business practices, which would be within their right, but the company goes so far as to commit to addressing systemic racism in its “communities.” This can easily be perceived as BCE calling Canada a racist country.
BCE has committed to a broad and undefined social purpose, with no particular scope presented to shareholders. In the proxy circular, Bell includes some specific human resources and philanthropic goals, but it’s unclear how deep this commitment goes.
If I were a shareholder, I’d be wondering what BCE is committing to do if fighting systemic racism conflicts with maximizing shareholder profits, as many activists and academics would insist is the case. And I’d also be wondering what, exactly, BCE means by systemic racism in the first place.
As a former Bell employee, I think it’s worthwhile for shareholders to inquire about what BCE’s political agenda means for human resources. My experience with Bell indicates that BCE’s political position on systemic racism may have some trickle down impact on management’s willingness to pressure employees to embrace certain liberal political views, or potentially risk termination. That would be an ill-advised strategy to retain the best talent, but does work if the goal is to emphasize politics, not just profits.
Few people are naive enough to think that BCE is putting its profit motives aside entirely. We have no reason to doubt that BCE’s CEO Mirko Bibic and board chair Gordon M. Nixon want to make money for BlackRock Canada’s Marcia Moffat. But we must recognize just how political some big corporations have gotten, and why using terms like woke capital to describe their social activism is necessary. Corporations like BCE are not traditional businesses that just want to sell a good or service. They want to impact the public's views on race, identity, and patriotism.
Keep in mind, BCE is headquartered in Quebec, Canada. The Premier of Quebec, Francois Legault, has explicitly rejected the term systemic racism on numerous occasions. Premier Legault believes that systemic racism implies a deliberate, top-down attempt from his government to discriminate against particular groups. From his perspective, that doesn’t describe the reality of life in Quebec. By taking a political position on systemic racism, BCE is essentially challenging the democratically elected leader of its home province. That’s politics, not business.
We don’t know how far BCE is willing to go in pursuing its political objectives. For example, BCE could one day oppose Quebec’s secularism legislation, which Premier Legault’s critics argue is an example of systemic racism in what could be reasonably perceived as BCE’s “communities.” Without limits on BCE's social purpose, who knows what's next?
Even some defenders of stakeholder capitalism have acknowledged that offering big corporations a political blank slate is a problem. One such defender is Sarah Keohane Williamson, CEO of FCLTGlobal, who advises that a business ought to remove the “ambiguity” around stakeholder capitalism by “[clarifying] its purpose, strategy, and definitions of success.”
With a loaded term like systemic racism, BCE's political agenda does not appear to have a clear purpose, strategy, or definition of success. Other businesses practicing Larry Fink/BlackRock-influenced capitalism are surely in a similar position. This is why it’s critical to have a public policy response to protect our democracies.
Democracies shouldn’t leave corporate power unchecked to advance the political objectives of such a small yet influential group of people. That would be called an oligarchy.
What we can do to limit the power of woke capital
We ought not to pretend that public policy responses to woke capital are obvious or easy. It’s imperative that we don’t replace corporate overreach with government overreach. But a number of ideas are worth debating. And these ideas are coming from business leaders and pro-business politicians, not people who are against capitalism.
In his book Woke Inc., Vivek Ramaswamy advocates for removing limited shareholder liability from social activist investors like BlackRock, because limited liability is meant to protect business activities, not political activities. Ramaswamy explains, if social activist shareholders want to pursue their political objectives, they ought to carry the same risk as other social activists. He also argues that if investors like BlackRock want to confess that they’re not truly interested in political objectives and stakeholder capitalism is nothing more than a scheme to make money, then these investors should plainly say so.
Another business leader who is concerned about woke capital, J.D. Vance of Narya Capital, has turned his attention to the impact that woke corporations have on their employees. Speaking at a 2021 conference hosted by the Claremont Institute, Vance proposed, “if you’re creating a hostile work environment because you have to tell everybody that they need to deconstruct their privilege, or they need to sacrifice or repent of their whiteness, then you are committing what should be a violation of the law in this country, and people should be able to sue you.”
One of the only legislators in North America to take woke capital head-on is U.S. Senator Marco Rubio. Senator Rubio’s solution is to make it easier for shareholders to sue corporate officers who use their companies to engage in politics. In Fox Business, the Senator writes, “large, publicly traded companies must provide a clear path forward for shareholders when they sue in response to these actions. My bill would put the burden of proof on the company to show that these actions were in shareholders’ best interests, and make corporate officers personally liable if they can’t prove it.”
None of these public policy ideas have been tried in earnest, at least not in North America. But they begin to pave the way for how those of us who want to limit the power of woke capital might actually do so.
We should not feel helpless at the prospect of challenging big corporations like BCE Inc. or its shareholder BlackRock. It’s time we reminded our citizens that voters, not woke corporate officers, are the bosses in a democracy.
Part four of this five-part series will honour Black History Month by exploring how woke corporations like iHeartRadio and Bell Media impact black communities. Dropping on Monday, February 21.
Again, you knock it out of the park! Wow! What any marginalized group needs and wants is their inherent dignity to be acknowledged and real on the ground assistance to improve their daily lives. With their future growth, development and independent successes the main goals. Nobody needs or benefits from words of pity. Poverty is the most significant divide.
Essentially, a person, any person but let's say, for the sake of argument, a young woman, hired by a Woke Corporation, is walking through a minefield in which she can be accused of being part of the academically-fashionable and corporately-useful 'structural racism' at any moment. The corporations are lucky to have social media on their side. HR can only fire you but the Woke Militia can ruin your reputation forever. Compare the status of an entry-level, working class person (of any color) with that of a Trans-identified upper class moron, who is handled ever so delicately for fear of repercussions. Let no one who reads this article think that Jamil Jivani goes public without risking parts of his future. Brave guy.