Sound controls

Companies have good reasons to defend their declared values

As one of Florida’s largest private employers and a big donor to local politicians, The Walt Disney Co. usually has a lot to say about Sunshine State legislation.

But when its chief executive tried to keep quiet about the controversial bill to teach sexual orientation or gender identity in Florida schools, employees called him out. CEO Bob Chapek ended up protesting the bill to Florida Governor Ron DeSantis, suspending his company’s political donations in the state and issuing a personal apology.

Chapek’s about-face is a good example of how change happens in big business. Whatever the merits of this particular bill, and Chapek’s apology infuriated many of his supporters, most CEOs now recognize the power of employees, customers and other stakeholders to force companies to comply. their declared values. And so they should.

Above all, no law or regulation required Chapek to intervene. None were needed, and that’s what we insisted on when confronted several years ago with a clumsy attempt in Springfield to force Illinois companies to diversify their meeting rooms. .

This Page strongly opposed a bill in the General Assembly that at the time would have required at least one woman, one African American, and one Latino on the boards of public companies based in the United States. ‘Illinois.

Fortunately, the bill was amended to require these companies to only disclose the demographics of their boards and executives (which many were already doing) and to order the University of Illinois to release an annual report on the state of corporate diversity.

This year’s report is out, and the 97 companies that filed the documents generally reported progress. Currently, 80% employ two or more female directors and 50% have two or more non-white directors. Only two companies have all-male boards and less than 20% are all-white.

Good enough? No. We want to see a lot more progress, and there’s reason to believe it’s coming.

As a result of the social justice protests, many companies that had not done so before were driven to embrace diversity as a corporate value and set goals to become more diverse across the board. This is important because, as with Disney, companies find it harder to say one thing and do another.

It’s proxy season, the time of year when shareholders review the performance of public companies and vote on issues at annual company meetings. It’s also when these companies recognize their results – financial and otherwise, including their progress on environmental, social and governance issues.

Among the most influential stakeholders are institutions that control large amounts of investment capital. BlackRock Chairman Larry Fink, for example, has made it a point to lobby the companies he invests in to fight climate change. If they don’t have a plan to adapt to the reality of global warming, BlackRock could very well decide to direct its megabucks elsewhere.

It’s the kind of pressure CEOs can’t ignore.

There is a similar push for increased diversity. For years, the main argument against diversity was financial. Rigorous, peer-reviewed research does not convincingly establish a causal relationship between diversity and earning more money. Studies on the subject show that having women on boards, for example, does not automatically improve or deteriorate financial performance, despite efforts by advocates to prove otherwise.

There are, however, good business reasons to promote diversity, rooted in fairness, equal opportunity and, most importantly, corporate reputation.

Good reputations are difficult to build and fragile to maintain. Ignoring social responsibilities can damage them, making it harder to attract the best candidates, charge a premium in the market, and retain customers.

Improving board diversity should go beyond hiring a few token directors to meet a superficial quota. Done well, advancing in such a prestigious setting heralds a broader cultural shift across the company.

The stereotypical corporate boardroom full of old, white, male fogies making secret decisions by the light of smoking cigars is almost a thing of the past. Let’s be patient enough to allow real change to take root.

—Chicago Tribune