Bottled-up rage: Bud Light and ESG, Part II

Investors who see risk associated with ESG are in for a surprise.

If you want to anger certain people on the Internet, criticizing the anti-trans Bud Light boycott is one way of accomplishing that.

That was the result of my column several weeks ago, the goal of which was to make the case that the folks who see Anheuser-Busch as a bad investment option amid current events are using ESG data to inform their stances.

I also poked a small amount of fun at Kid Rock, whose over-the-top act of Bud Light mass destruction attracted nearly as much attention as the company’s failed nod to the trans community. Among the hate mail I received (of which there was plenty!) much of it came from enraged fans of the musician. To be clear: My opinion is that the stunt was ridiculous; however, my intent is not to criticize anyone’s taste in music. I am hardly qualified to do that.

But if it would be cathartic for any culture warriors out there, feel free to send disparaging comments about Bruce Springsteen. Go ahead, I can take it.

Regarding my thoughts on the ESG implications of the Bud Light fiasco — boycotts are nothing new, and consumers’ decisions to avoid products with social associations they find uncomfortable aren’t the issue I’m going to address.

But if your investment guidance is “go woke, go broke,” (from several responses I received — very clever), I have some difficult news for you: You use ESG.

And that’s because ESG is not sustainable or responsible investing. ESG is a source of data, and what you choose to do with that data is your filter.

Of course, that is somewhat of a semantic argument. Folks who are riled up about “ESG” are actually unhappy about sustainable or socially responsible practices.

“ESG is a framework for assessing risk,” said Andy Behar, CEO of As You Sow. Investors who would avoid Anheuser-Busch in light of the recent events “are looking at the risk of Bud having a trans person on a can. That is absolutely ESG — it’s just a different set of metrics.”

The irony is that taking away the ability of investors to consider ESG factors, as numerous states are doing, could also limit options to not invest in a company because you view their social practices as unacceptable or even financially risky. A bill submitted in the House to rid the Federal Thrift Savings Plan’s new mutual fund window of ESG-themed investments would also appear to restrict the Christian-themed options it currently has.

EYE OF THE BEHOLDER

It’s problematic that “ESG” has different meanings, varying by context and whom you ask, Green Century Capital Management CEO Leslie Samuelrich said in an email.

“The attack is political theater that has nothing to do with protecting the pensions of teachers and firefighters and in fact, may be reducing the returns for these hard-working individuals. It’s ironic that they accuse asset managers of having an agenda,” Samuelrich said. “The twist on this is that the overall confusion about ESG is the top story, but the origins are really an attack on climate risk and fossil-fuel-free investing. As recent documents reveal, this campaign was cooked up by fossil fuel companies and then likely delivered on a platter to politicians the industry supports.”

The most thoughtful critique of my column came from longtime retirement industry observer Nevin Adams.

“ESG is way too broad a heading for any rational person to embrace (or refute) right now,” Adams wrote. “If you think ESG makes sense, that has to be because you have in your mind an idea as to what that means, and if you can articulate that for me, I might well agree.”

It’s understandable that some people take issue with the advocacy that is usually attached to ESG, he noted. The marketing mishap shows that “if there is any connection to ESG, it’s the sense among many that values that aren’t shared by us all are being imposed on the ‘rest’ of us.”

COMPANY POLITICS

Anheuser-Busch’s handling of the fallout from its extremely limited campaign with trans influencer Dylan Mulvaney (they sent a custom beer can bearing her likeness) didn’t seem to make anyone happy.

It comes across as “social washing,” Peter Krull, partner and director of sustainable investing at Earth Equity Advisors, said in an email.

“This whole Bud Light thing is a big nothing. [Anheuser-Busch] shows that they don’t actually stand by what they advertise,” he said. “Conservative politicians will continue to do anything to rile up and pander to their base. And the ESG/sustainable investment movement will continue to move forward.”

Companies have long taken stances politically, or at least sought to be inclusive to as many groups as possible, generally with the goal of being more profitable.

But anger among conservatives at big companies seems to be at an all-time high. Keeping track of the companies to boycott at this point is like having a second job.

Currently, people are mad at Target (LGBTQ+ goods); The North Face; Major League Baseball; NASCAR (pride ads); Miller Lite (women making beer and not in bikinis); Lego (LBGTQ+ friendly building set); and, in an incredible twist, Christian-founded, once-anti-LGBTQ-donating Chick-fil-A (because it has a chief diversity officer).

Those are just some of the recent ones. Conservative groups, well before the Bud Light debacle, called for dozens of others.

“Not every issue is a political issue. It’s troublesome for companies because it is treated as if it is,” said Carolyn Berkowitz, CEO of the Association of Corporate Citizenship Professionals. “It’s almost as if brands are being required to affiliate with one kind of customer and be either ‘red’ brands or ‘blue’ brands — and that’s not good.”

The current atmosphere has led some companies, including asset managers, to tone down their use of ESG considerations. However, given the financial materiality of that, “companies are continuing, privately and publicly, to look at the data,” Berkowitz said. “It’s a difficult moment, and I don’t think it’s going to be better soon. It might be, after the election.”