The self-inflicted wounds of Budweiser and Disney

A post-mortem analysis

I am being asked frequently if the politicization of workplace inclusion and the “anti-woke” movement are ringing the bell of the end of corporate advocacy on social issues. It instead is the end of amateurism in Corporate Social Responsibility engagement. Companies like the Dodgers (see this week’s controversy) might be easily swayed because their commitment is flimsy and opportunistic in the first place; others, focused on long-term values, are learning lessons from these incidents and refining the way they engage on social issues creating long-term value.

The Chapek’s Disney and Budweiser proxy war over LGBTQ+ inclusion showcases how these companies have not learned much from previous business controversies over LGBTQ+ issues. Ikea, Barilla, and Coca-Cola were among the brands that faced similar backlashes in the past. Having learned lessons from these incidents, all three were among the first to express support for the United Nations LGBTQ+ Corporate Standards of Conduct I co-wrote in 2017.

There is a recipe for disaster when navigating social issues: i) leaving decision-making to a small insular group; ii) lacking company values; iii) underinvesting in internal and external advisory services on social issues; iv) not having a crisis management plan; v) missing a long-term vision.

Decision-making, information sharing, and hubris

• Disney. My informal discussions with Disney staff in the aftermath of the Bob Chapek debacle made it apparent that Chapek, advised by former BP exec Geoff Morell (also a former Busch appointee at the Pentagon), made decisions without consulting the thousands of human rights specialists, corporate social responsibility and communication employees, and its Business Employee Resource Group (BERG): the Disney Pride Network. It reveals the contempt the profit-and-losses divisions often hold for corporate functions at a time that has become crucial to the business.

• Budweiser. In the case of Budweiser, there was a complete disconnect between the Bud Light marketing team and the rest of the company, which made for an unauthentic engagement when the Senior leadership of the company was never on board. Anheuser-Busch, the parent company, famously donates to state lawmakers supporting anti-trans legislation since 2015. Of the 16 people in the US leadership team, one is a woman: (check it out for yourself here) and guess what she is in charge of? HR, of course. In 2023, it will tell you everything you need to know about this company. The right-wing noise on social media quickly shattered a “marketing coup” with no real roots in the company’s psyche. I always tell my clients that if Senior Management is not convinced, LGBTQ+ enagegement efforts are bound to be ineffective.

But our dreams are rather “macho”… Hats off to Lindsay

The courage of your convictions

• Disney. The first Disney statement on “Don’t Say Gay” showcases how neutrality and, therefore, “doing nothing,” or in this case, “saying nothing,” is no longer an option in our world. The statement is almost insulting in how it tried (poorly) to avoid being mixed up in an issue that is at the center of its business:

  “We understand how important this issue is to our LGBTQ+ employees and many others. […] The biggest impact we can have in creating a more inclusive world is through the inspiring content we produce, the welcoming culture we create here, and the diverse community organizations we support, including those representing the LGBTQ+ community.”

• Budweiser. The company was in an even trickier spot because it did not have corporate values despite an ambitious manifesto. Anheuser Busch lacks human principles such as purpose, ethics, workplace culture, or meaning. When a company has an authentic point of view (i.e., linked to its beliefs and not a marketing opportunity) on a societal subject, it can create conversations and take positions that strengthen customer relationships. A marketing campaign, like the Dylan Mulvaney one, for another brand would have been a way to be heard in the ambient media noise, where it becomes increasingly challenging to attract attention. But without building on solid internal values, pro-LGBTQ+ marketing campaigns become hollow and risky.

Securing the right advice

• Internally. It is not because you are LGBTQ+ that you understand the community and its allies. What is striking in the case of Disney and Budweiser is that the companies had rare lesbian Corporate Directors: Susan Arnold, who chaired the Board of Disney at the time, and Michele Burns, who serves on the Board of Budweiser (only 27 individuals are in Fortune 500 Boards). Yet, the Board did not provide sound advice to the leadership. It is always preferable that the messages implemented for LGBTQ+ people are designed or tested with the community and interpreted by LGBTQ+ people, preferably people with links to civil society. This is why investing in ERGs is always a good deal, yet many companies continue to be penny-pinchers in supporting networks that provide them with invaluable connections and insights.

• Externally. Both companies relied on their 100% HRC Corporate Equality Index score as their external engagement on LGBTQ+ issues. HRC quickly dropped them both (see Anheuser-Busch loses top LGBTQ+ rating over its Bud Light response). Instead of relying on self-reported assessment, several companies have taken steps to secure expertise by setting up councils, including T-Mobile, GM, Abbott, Elsevier, Prada, the Morgan Stanley Institute, Barilla, Delivery Hero, and L’Oreal (on which I serve) (KKR also created an ESG Council). By securing external counsel on human rights issues, companies can innovate, avoid blind spots, and send a clear message to employees, consumers, and investors that they are taking these issues to heart.

Having a crisis management plan

• Disney.   Chapek’s flip-flopping was disastrous, as if he was not prepared for a crisis bound to happen. He could have stayed the course if his convictions had been well anchored. Instead, he relied on one advisor, Geoff Morell (ironically, Morell ended up at Teneo, a PR company with clients including Xerox Corp. and Coca-Cola), who was blinded by his personal reactionary view of the world. For the “most protested company on earth,” this was a surprisingly botched job.

• Budweiser. Anheuser Busch should also have stuck to its positioning and grown a spine. Instead, Anheuser-Busch CEO Brendan Whitworth’s lackluster statement fueled the fire. When Honey Maid launched its “This Is Wholesome campaign” in 2014: it expected some level of backlash and managed it well. Most consumers say it's essential for brands to take social positions, and a more significant proportion say they are more likely to buy products from a brand that supports a cause with which they agree. 61% of consumers think diversity in marketing is crucial, and 83% of Millennials prefer to buy from companies that align with their beliefs and values.

Playing the long game

• A clear mandate from stakeholders. I have written before on the structural underpinnings behind growing calls by the workforce, investors, and the public to impact society at large positively. The world is facing a crisis of trust and democracy. Until it is resolved, companies must pick up where the government and other intuitions left off. Incidentally, the private sector is acquiring a “social license to operate” — a development transforming capitalism for the better.

• An LGBTQ+ demographic revolution. Brands would be wrong to fear a conservative reaction from their target audience: consumers, particularly the youngest, are increasingly aware of these social issues and can speak out widely on social media. A radical demographic shift is happening. While 7.2 % of Americans self-identify as LGBTQ+, new studies are finding millions of young nonbinary and transgender Americans.

Companies would be misguided to roll back their engagement on LGBTQ+ issues today under duress from a few loud conservative voices on social media, manipulation by political leaders engaged in a race to dismantle democratic institutions mouthing off to get publicity. This, too, shall pass.

The trend is going in one obvious direction, and today's decisions will affect employee, customer, and investor loyalty tomorrow. Companies should instead start by acting internally and strengthen their mechanisms to deal with social issues externally. The priorities should be investing in Employee Resource Groups, external advisory services, and internal coordination. Examples of companies doing it right, such as JP Morgan, Procter & Gamble, Starbucks, Levi’s, or  Coca-Cola, combine ambitious commitments on the HR side, clever marketing directed at the community, and active support for LGBTQ+ civil society when the vast majority of LGBTQ+ people still live 'solitary, poor, nasty, brutish, and short' lives.

As for Anheuser-Busch and Disney. They will be fine. Post-Chapek Disney is courageous, bold, principled, and will come on top. Anheuser-Busch will have to learn its lesson the hard way, but I assure you the company will engage on a redemption tour sooner than you can say “Dylan Mulvaney.” For both companies, these incidents will ring the end of amateurism in their LGBTQ+ engagement