This has been such an extraordinary Summer in terms of markets, governments and business there has been too much about which to write. But, something inevitably comes along that stands out as distinctive and worthy of note.
Charlottesville, VA, this past weekend was the focal point for expressions of some of the ugliest thoughts, images and behaviors that fester in America. These rights have been tested before in our history, and my own recollections immediately returned to Skokie, IL, in 1977 and 1978, when the National Socialist Party of America sought to stage a neo-Nazi rally in a heavily Jewish suburb of Chicago. 40 years later we are still trying to sort out whether this type of activity is constitutionally protected. But, from the perspective of a socially or environmentally aware investor, the question is rarely “can you?”; It is “should you?”.
President Trump failed to dress down the Klan, Nazi and white supremacist demonstrators in his first two days’ worth of attempts to mollify the vast majority of the public when he has proven repeatedly that he will willingly bring down the full weight of his bully pulpit on whoever displeases him. Other politicians stepped into the breach from senators to mayors to the Vice President, making statements that were not about freedom to assemble or freedom of expression. They were about condemning grotesque, hateful and un-American rhetoric and displays. What did the business community do?
This is what is worthy of note. The CEOs of Merck, Under Armour, and Intel resigned from the President’s American Manufacturing Council in the immediate wake of the weekend’s tragic events and Trump’s failure to decisively condemn them. From an ESG and shareholder engagement perspective, we talk a lot about the power of divestiture, but almost always in the context of changing the behavior of companies. What we have just witnessed is an all-too-rare embrace of that same process where companies and their leaderships publicly divested themselves from association with an entity (in this case the White House) that does not reflect the priorities of social justice these companies espouse as part of their sustainability frameworks. This is particularly compelling because Under Armour was previously roughed up in the ESG investing community for the CEO’s support of Trump at a time when questions of his stance on diversity and inclusiveness were at the forefront. Engaged stakeholders including shareholders, employees and customers made themselves heard, and now Under Armour CEO Kevin Plank is paying that forward.