For more than 50 years, the concept of ‘shareholder value’ held sway in microeconomic thinking – the idea that the sole purpose of a public company was to make money for its shareholders. Capital belonged to its shareholders, not to management whose only task was to make it grow – to make sure that decisions were made for the sake of long-term profitability and financial health.
This also had a moral component: if customers or workers were maltreated, talent wasted and living conditions of communities worsened –all for the sake of boosting short-term gain – both reputation and future profits would suffer. Violating relevant laws would carry the costly risk of fines and possibly the loss of operating licenses.
As in a climate of influence-buying and partisanship the power of law-makers and public servants had shifted to corporations, public opinion demanded from corporations themselves to act in the public interest. The idea of ‘stakeholder value’ manifested itself in ever more detailed rules for ESG investing, prescribing yardsticks for environmental, social and managerial behaviour, demanding ‘good’ corporate citizenry.
Alas, it became a hoodwinking mess, as I have described in a piece in April, a contradictory, box-ticking exercise, open to manipulation while degenerating to a public relations and marketing exercise.
As values often clash and are only rarely shared universally, enterprises metamorphosed into political actors - always alienating one or other part of its ‘stakeholders’ – at a cost.
A few weeks ago, the Guardian journalist Ian Leslie published a newsletter titled ‘Down with pronouns’ on substack.com (https://ianleslie.substack.com/p/down-with-pronouns) focusing on corporate LGBT signalling. I do recommend reading it in full, as it is a very carefully crafted comment on gender- identity thinking. His starting point was the recent introduction of “gender-neutral” name tags for all employees of Halifax, the UK bank. The pin displays the name of the staff member followed by the pronouns “she/her/hers”. It fitted hand and glove with the bank’s advertising slogans “Pronouns matter” and “It’s a people thing”.
This marketing exercise triggered a stormy debate on social media, with many of the correspondents furious about the bank’s act of corporate lecturing. A growing outpour of public anger caused the increasingly desperate head of public relations to twitter: “We strive for inclusion, equality and quite simply, in doing what’s right. If you disagree with our values, you are welcome to close your account.” His “values” clearly took precedence over custom.
I agree with Ian Leslie that those fancy name tags, meant to attract younger customers were less of a well-crafted, cynical marketing rouse, but an unforced mistake. People in PR and advertising tend to be young, fashionable, righteous urbanites who wrongly assume that their thinking is, or should be, broadly shared by all sectors of society: “It’s a signal of allegiance to a whole set of politically charged beliefs about the relationship between gender and sex and identity. Beliefs that are – let me put this as mildly as possible – some way off from being universally accepted truths.” (Leslie).
The discomfort of having to take sides in an issue many have never thought about that much, affects not only customers but employees too. Why would anyone wish to be dragged on the podium in a matter of private sentiment?
Instead of offering surgery to a fluid state of mind, we should better signal that however one feels is fine- Andreas Weitzer
People applying for a loan used to don a suit, not jeans, to emphasise creditworthiness. Should they dress up as Dame Edna now to better their chances? The questions referring to overdrafts or mortgages should cover credit standing, not world views, one would have assumed. This is not to deny enterprises the duty of exercising moral values.
Human resources departments should live inclusiveness when hiring. Neither social standing, nor racial backgrounds should limit the utilisation of talent. Neither sex, nor LGBTQ+ identities should matter for the question who to hire. As we are running out of labour, neither age, nor criminal convictions, neither passports nor disabilities, should be a hindrance to employment. This is the place where inclusiveness matters. It differs from mere virtue-signalling, which does nothing to broaden customer satisfaction or job appeal – nor does it boost revenue.
The signallers are caught in a vicious circle of self-righteousness. They not only ignore the wishes of many in the LGBT community to keep their, often shifting, gender identity private (“What do you want me to put on your CV?”, “How do you wish to be addressed?”), they also alienate candidates who abhor to be grouped (“Are we discussing sex or qualifications?”).
Managers wrongly assume that their virtue bubble is universally shared. A recent Gallup survey, gauging gender identities (GI) in the US revealed not only a growing trend towards a non-traditional gender self-identification, but also that GI is a generational thing: while only 0.8 per cent of people born before 1946 identify as LGBT, already 20.8 per cent of those born after 1997 (‘generation Z’) do so. Millennials (born after 1981) are still a significant proportion with 10.5 per cent. But the older you are, the less you can be bothered to question your gender.
Aside: The increasingly rigid compartmentalisation of GIs forces choices upon the self one might wish to avoid. Instead of fostering freedom, it boxes in. This is particularly hard on teenagers who we force at an early age to decide who they are – a question even more difficult to answer for a young person than what career to follow. Instead of offering surgery to a fluid state of mind, we should better signal that however one feels is fine.
The generational breakdown above also indicates a protest against a patriarchal-capitalist order of things. The students of the 1960s protested against parental authority, war and oppression. They didn’t go on the barricades for the industry to produce jeans with holes.
Businesses, gobbling up the protest values of youth, are a cynical tool of suppression, taking on with impunity the cloths of the young and falsely mimicking their play of gender. This has purpose: it fogs and evades the important questions of better pay, employment safety and equal opportunity for all. And it ignores the wishes of shareholders, who’d prefer their appointed managers to increase profitability rather than taking a trip on the wild side.
As a retail investor I want to decide what enacted corporate values are important enough for me to forgo future income. They might not. What I don’t want is mere political posturing. I appreciate that many companies, after the fatal decision of the US Supreme Court to renounce Roe v. Wade, are offering financial aid to employees seeking to evade their states’ abortion ban. They should do so with as little noise as possible. They are not politicians.
I side with gay Mickey Mouse against the wrathful anti-gay governor Ron DeSantis, because it was defending its workers’ rights, who are to a large part drawn from the rainbow crowd. I like CEOs who protested against Trump, because he harmed their businesses. I have sympathy for CEOs who fear the undoing of America’s constitutional order, or who warned about the costs of Brexit. And I treasure all those CEOs who understand that they have to radically eliminate their companies’ carbon footprint if we want to stabilise global warming.
Yet I don’t want to be told what virtues to hold up myself. In the end, it is my money the flag-wavers squander when they put their grandstanding over their duty to manage my money.
Andreas Weitzer is an independent journalist based in Malta.
The purpose of this column is to broaden readers’ general financial knowledge and it should not be interpreted as presenting investment advice, or advice on the buying and selling of financial products.
andreas.weitzer@timesofmalta.com