Woke CEOs and the Financial Fear Factor

In Go Woke, Go Broke: The Inside Story of the Radicalization of Corporate America, Charles Gasparino, the Fox Business Network senior correspondent and longtime Wall Street reporter, wades directly into America’s culture wars to focus on how progressive politics is running rampant in corporate boardrooms. The idea for the book—Gasparino’s sixth and his first in more than a decade—was taken straight out of last year’s business headlines when an array of U.S. companies found themselves on the receiving end of consumer and political backlash for their progressive stands.

In taking on his subject matter, Gasparino does not shy away from the hot-button social issues of the day, including diversity, equity, and inclusion (DEI), critical race theory (CRT), and transgenderism and LGBT rights. The author recounts much of last year’s press coverage about Disney "using shareholder money to thwart a Florida law" and "make sure kids knew about gender reassignment therapy and intercourse between various sexes," Target celebrating Pride Month by displaying "tuck-friendly bathing suits for men transitioning to women near rainbow-colored onesies for toddlers," and Anheuser-Busch "turning to a transwoman influencer in its marketing of the nation’s then-top-selling beer, Bud Light," with additional color provided by Gasparino’s Rolodex of unnamed sources. For maximum provocation, Gasparino chooses as the title for his book the ubiquitous Go Woke, Go Broke epithet that has become a rallying cry for conservative groups looking to boycott overly progressive companies.

Technically speaking, this anti-woke catchphrase overstates the case. So-called corporate wokeness is not a leading cause of bankruptcy. Despite the press spin at the time, Silicon Valley Bank collapsed and was seized by bank regulators in March 2023 due to weak interest rate risk and asset-liability management policies, not because of management’s apparent obsession with DEI causes (although this clearly was a distraction). Moreover, none of the book’s main corporate targets—Disney, Target, and Anheuser-Busch—appear to have suffered lasting financial harm for their recent woke transgressions, judging by their respective stock prices as of the August release date of Go Woke, Go Broke.

That said, corporate boycotts and negative headlines can have real and lasting financial impact, as seen by Bud Light’s continuing loss of market share and brand revenues nearly 18 months since the Dylan Mulvaney fiasco. Why is it that Anheuser-Busch, maker of iconic American beers and pitch-perfect advertising campaigns, still can’t (or won’t) right its marketing ship? Why do Disney and Target still pander to the LGBT community at the risk of alienating their core customer bases? Why have so many companies forgotten Michael Jordan’s sage advice about selling sneakers to both Democrats and Republicans?

Gasparino argues that most American CEOs, despite being "masters of the universe," are basically cowards at heart, afraid to rock the boat at the pinnacle of their careers. This begs the question: Exactly who or what are the titans of business afraid of? None of the various explanations offered by Gasparino—Millennial workforces, younger demos, omnipotent human resources departments, and fringe activist groups—are particularly compelling. He tries to make the case that the events of 2020—the death of George Floyd and ensuing Black Lives Matter protests and civil unrest—were somehow catalytic and cathartic in awakening corporate executives to America’s social problems, but this too falls flat.

A major flaw of the book is that it compartmentalizes corporate wokeness and the acrimonious acronyms of DEI, CRT, and LQBT and never connects these dots back to the broader environmental, social, and governance (ESG) investment movement. By doing so, the reporter Gasparino misses the bigger story and the key role played by financial firms in enforcing the new progressive rules of sustainable business and stakeholder capitalism. This blind spot becomes clear in the book’s kid-glove treatment of Wall Street, which stands in stark contrast to Gasparino’s scathing rebukes of the financial industry in his previous books. Now, Gasparino channels Gordon Gekko’s "greed is good" mantra to justify the embrace of ESG by investment firms such as BlackRock, often bending over backward in the process.

Gasparino notes that ESG has made BlackRock "uber-wealthy" because asset managers can charge higher fees for funds carrying a sustainable label. Such hyperbole ignores the fact that ESG funds comprise a small minority of global assets under management (i.e., roughly 6 percent for BlackRock at year-end 2023), and integrating ESG criteria into all fund categories and asset classes is an overhead expense drag on investment returns. It directly contradicts, moreover, the main thesis of the book. If progressive environmental and social business practices such as DEI do not drive stock prices or credit ratings, then ESG necessarily cannot improve investment performance for fund managers (and should not be implemented on fiduciary grounds).

Contrary to Gasparino’s take, most of Wall Street has been suckered into the sustainability trade not by the money but rather by the need to virtue signal in the wake of the 2008 global financial crisis. Over the past 16 years, more than 5,300 financial firms have joined the United Nations’ Principles for Responsible Investment, the main ESG affinity and advocacy group on Wall Street. Now, with financial regulations looming that will make ESG mandatory, no one on Wall Street is willing or able to hit the exit door. Gasparino gives short shrift to the role played by the government sector in pushing the ESG agenda on the financial markets, first indirectly through supranational agencies such as the U.N. and international NGOs like the World Economic Forum and now directly through the regulatory function. Indeed, in the grand ESG scheme of things, DEI and the other cultural war issues that Gasparino focuses on are mainly a distraction from the priority goal of climate change, which is a topic largely ignored throughout the book.

The business community is now holding its collective breath to see if climate and ESG mandates by the Securities and Exchange Commission, the Department of Labor, and other executive agencies become the financial law of the land in the United States, much as they already have in Europe. Regardless of political leanings, what keeps all corporate CEOs up at night these days is the fear of paying more for growth capital or losing financial market access altogether if their companies are deemed "unsustainable."

As with all things progressive, ESG is an all-or-nothing package deal, with the contrived concept of intersectionality requiring the acceptance of the entire policy program. This is why corporate leaders now reflexively grab onto third-rail social and political issues such as abortion, sex education, and parental rights and refuse to let go even when it hurts their companies financially. It is a progressive loyalty test, and they do not want to fail due to the potential market implications.

Go Woke, Go Broke sheds additional light on the progressive takeover of Big Business and the financial markets. It raises many important questions. Unfortunately, it fails to answer most of them.

Go Woke, Go Broke: The Inside Story of the Radicalization of Corporate America
by Charles Gasparino
Center Street, 320 pp., $30

Paul Tice is a senior fellow at the National Center for Energy Analytics, an adjunct professor of finance at New York University’s Stern School of Business, and author of  The Race to Zero: How ESG Investing Will Crater the Global Financial System.

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