Target recently drew the ire of conservatives for LGBTQ+ Pride merchandise. As this action has been speculated to be the result of ESG influence, it is worth looking at Target’s
Environmental, social, and governance, or ESG, is a type of investing where factors beyond strictly financial matters are considered. As ESG investing has increased, publicly traded companies began adding ESG reports to their corporate documents. What companies choose to highlight in these reports vary drastically as no reporting standard currently exists. The Securities and Exchange Commission is currently finalizing reporting standards for the environmental aspect, but social and governance relies on third party organizations.
The social category is the major source of controversy for the right. Diversity, equity, and inclusion, or DEI, programs; policies which target specific industries; and policies tied to political stances are often factors in ESG. Companies may implement programs and internal policies to bolster their ESG Reports. Recently, the focus of controversy has been on outward facing LGBTQ+ polices supporting and promoting the transgender community.
Companies highlight rankings which benefit them, and ignore those which do not. If they are facing pressure from large fund managers to increase a particular score, companies will include goals in their ESG report on how they will improve. This was the case with Anheuser-Busch InBev, the parent company of Budweiser.
Budweiser was the first major company to draw the ire of conservatives by releasing a limited-edition Bud Lite can featuring transgender influencer Dylan Mulvaney. A look at their 2022 ESG Report showed a focus on LGBTQ+ issues and adding influencers to their roster to raise visibility. This leads to a logical conclusion that the Mulvaney decision was, at least in part, influenced by their ESG scores.
Target was next, facing backlash for LGBTQ+ Pride merchandise. A review of Target’s 2022 ESG Report found high scores relating to LGBTQ+ issues and a history of Pride support. Target responded to the controversy by removing some of the clothing and moving the rest to different locations in the store. However, conservative groups are still boycotting the store with many looking to Walmart as an alternative.
This raises the question as to if Walmart’s policies are drastically different from Target’s, or if Walmart has simply avoided the controversy so far. While it is debatable if ESG is driving LGBTQ+ support, the ESG reports do provide valuable information as to the history of the company and how they want to be perceived.
Walmart’s and Target’s 2022 ESG Reports are remarkably similar on LGBTQ+ issues. DiversityInc’s Top Companies for LGBTQ Employees, the standard metric in ESG reports on the internal policies of a company, gave high rankings to both companies. In their 2022 report, Target was ranked #4, while Walmart was ranked #6.
Both companies received a 100% score on the Corporate Equality Index put out by The Human Rights Campaign. CEI is 40% based on outward facing LQBTQ policies, and a company can face an additional 25% penalty for actions which do not support the LGBTQ cause.
A perfect CEI score requires donations to LGBTQ+ causes, refusal to donate to non-religious organizations that discriminate based on LGBTQ+ issues, and support of gender transition. Target’s donations included $2.1 million over 10 years to GLSEN, a nonprofit that focuses on LGBTQ+ inclusivity in schools. Similarly, Walmart donated $500,000 in 2021 to PFLAG, a nonprofit support organization for the LGBTQ+ community.
While the Target controversy originated with their 2023 Pride merchandise, Walmart boasts a similar line on their website. Walmart also highlights LGBTQ+ manufactured products, a shared goal in the ESG reports. Both companies use nearly identical language of encourage the use of diverse suppliers that are at least 51% owned by “woman, minority, veteran, disabled veteran, person with a disability or member of the lesbian, gay, bisexual or transgender (LGBT) community.”
The only difference between Target and Walmart on LGBTQ+ issues in their ESG reports is a matter of semantics. Their policies are the same, as are their outward actions to support the LGBTQ+ community. Ultimately, the only reason Target is the focus of conservative pushback while Walmart is avoiding focus may be simply a matter of luck.