Go woke, go broke? Leading American financial newsletter Bloomberg has declared that the ‘short-lived era of the woke CEO – of widespread corporate outspokenness – is over’. Companies are getting back to focussing on doing their job and prioritising shareholders. But travelling in the opposite direction, Australia’s Labor Treasurer Jim Chalmers has proclaimed his new doctrine of social-benefit, big-government interventionist socialist-capitalism. While Bloomberg welcomed in 2023 by reporting that American corporations ‘are realising they overestimated the goodwill generated from their CEO’s public stance on issues such as gender rights’ and are pulling their heads in, Chalmers has stuck his neck out in favour of changing the profit-oriented top priority of Australian corporations into giving priority to social policy objectives.

The Chalmers doctrine may be just the thing needed to frighten Australian boardrooms into following the Bloomberg lead and quitting the virtue-signalling social policy arena; putting shareholders’ money where the directors’ mouths are (and thereby actively encouraging similar Chalmers’ governmental social intervention) has now become ‘a high-risk strategy’. Bloomberg says ‘deciding what corporations should say about the latest hot-button issue… has escalated into a potentially massive reputational and political risk’.

As Bloomberg notes, ‘in the last five years, companies and their CEOs have made public statements opposing legislation that prohibits transgender people from using bathrooms that align with their gender identity and lobbied for same-sex marriage rights. They have campaigned to support gun control and against the January 6, 2021, attack on the Capitol. They tweeted #BLM (Black Lives Matter) and #MeToo.

Companies taking a position on social and political issues has become so much the norm in the last few years that it’s easy to forget how unusual this kind of rhetoric once was.’

In recent times, just as US businesses have waded into once-taboo topics by claiming they aligned with their corporate values (but largely because they viewed it as good PR), Australian boards followed suit, prompting strong criticism from the former Morrison government and division within corporate leadership. Scott Morrison’s call for business to focus on their businesses rather than on ‘activist causes’ and his ministers’ attacks on corporate Australia for ‘too often succumbing or pandering to noisy, highly orchestrated campaigns of elites’, resulted in some senior businessmen backing the Prime Minister’s call for industry to shift its public focus back towards economic reform. Wesfarmers, Woodside and National Australia Bank former chair Michael Chaney was quoted at the time as broadly agreeing with Morrison’s sentiments: ‘The primary duty of company directors is to the company itself and therefore to its shareholders.’ But he also added that while companies certainly should be speaking out on issues like tax reform, regulation and industrial relations because it is in the interests of the company to do so, they ‘should also be mindful and supportive of the interests of the broader community’ – but not as the primary duty, thus making it ‘not incompatible with the central focus on shareholder returns’. And former high-profile director Roger Corbett then warned that the growing propensity of big companies to focus on social issues risked alienating large portions of both their shareholder and customer bases.

The 2017 same-sex marriage referendum marked a huge escalation in Australian corporate involvement in social issues, led by Qantas CEO Alan Joyce. He was criticised for his outspokenness by former minister and current opposition leader Peter Dutton, who said business leaders should ‘stick to their knitting’.

But Joyce, with the support of the Qantas board (which had, it reported, sought the views of major shareholders, staff and customers) was joined in the campaign by 130 other large Australian businesses. Has this burst of virtue-signalling really paid off? The American experience suggests not – and much of it was based on misconceptions about the size of support for the causes into which business was intervening.

That may be the simple pragmatic reason for US corporations ending their woke escapade. They are ceasing their bowing down in fear of the market impact of noisy minority campaigns mainly as a result of the fact-based realisation that the minorities simply are not as powerful as suggested by the loudness of their voices.

Last year an opinion poll by YouGov America was a revelation. It showed that Americans consistently, and vastly, overestimate the size of minority groups – with the result that corporations have invariably acted in line with these massive misconceptions. What portion of society is gay and lesbian? Respondents say 30 per cent; in truth it’s about 3 per cent. Bisexuals? People say 29 per cent; in reality, it’s 4 per cent. How about transgender people? Those polled say 21 per cent; it’s actually more like 0.6 per cent.

The same pattern holds for religious, as well as racial and ethnic minorities. Respondents estimate the country is 27 per cent Muslim and 30 per cent Jewish when the actual proportions are 1 and 2 per cent, respectively. Those polled likewise think Native Americans make up 27 per cent of the country when they are 1 per cent, Asian Americans are 29 per cent when they are 6 per cent, and Black Americans are 41 per cent when they are 12 per cent.

Clearly, a great deal of the overestimation of minority size picked up in the YouGov poll is driven by the prominence of minority groups in both the traditional media (both news and entertainment), and noisily unrepresentative social media, particularly where virtue-signalling support is rampant, This excessive media attention reinforces the perception that minority groups make up a larger segment of the population, and wield far more political power, than they really do – and corporations are equally misled in giving way to hugely disproportionate social and political pressure.

Although there has been no similar opinion poll in Australia, corporate social interventions appear to have suffered from the similar mistaken over-statement of minority power and influence as in the US. The 2021 Australian census statistics can provide company boards with a useful reality check.

But Australian corporations face tough hurdles trying to follow the American lead in escaping this tyranny of activist minorities with its woke consequences. After all, US companies are not subject to the same ideological agendas that are being increasingly imposed on Australian boards of directors by the rapidly rising shareholding power and influence of union-dominated industry superannuation funds. And American companies don’t face the prospect of the imposition of Jim Chalmers’ interventionist socialist-capitalism.

Will we stay woke – and go broke?