What Nelson Peltz’s ‘Surprising’ Anti-Woke Campaign Can Teach Us

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The American economy has lost $50 trillion since 1990 due to race-based barriers to opportunity and can gain $5 trillion within five years if they are torn down. Among these barriers are historically biased hiring practices that have created homogenous workforces. DEI or “fairness” efforts increase employee engagement, which can generate an additional $550 billion in profits annually in the U.S. through increased productivity and innovation, in addition to reduced attrition costs. Unsplash+

While the original use of words and terms like “woke” and “DEI” was very effective in raising awareness about unfairness in America, the “anti-woke” and “anti-DEI” backlash has been even more effective. The backlash didn’t just swing society’s pendulum back to the middle neutral, it swung to extreme aggression, culminating in attacks on all efforts intended to reduce race-based unfairness. These coordinated attacks aim to swipe the blindfold off Lady Justice, tipping her scales with the weight of unfairness. 

Yet, with the wind at its back, billionaire activist investor Nelson Peltz’s recent “anti-woke, anti-DEI” attack against The Walt Disney Company (DIS) failed. This failure is surprising in an environment where the deck is heavily stacked in favor of anti-woke and anti-DEI. However, when evaluated objectively, the outcome is economically rational for everyone, from Fortune 500 companies and individual households to the media and politicians.

Representation in the workplace and C-suite drives financial returns. 

Shareholders are voting with their wallets. Data irrefutably indicates that “pro-woke, pro-DEI” shareholder activism would deliver greater economic value to all stakeholders than an anti-woke, anti-DEI strategy. The American economy has lost $50 trillion since 1990 due to race-based barriers to opportunity and can gain $5 trillion within five years if they are torn down. Among these barriers are historically biased hiring practices that have created homogenous workforces. DEI or “fairness” efforts increase employee engagement, which can generate an additional $550 billion in profits annually in the U.S. through increased productivity and innovation, in addition to reduced attrition costs.

HR departments and the boards that often oversee their strategy should implement hiring programs that encourage demographic diversity, partner with historically Black colleges and universities to fill talent pipelines, and offer opportunities for growth among diverse employees with high potential. Pairing employees of color with a more senior sponsor with experience and some degree of influence is equally critical to ensuring the success of a diverse workforce. For example, when Lou Gerstner, former Chair and CEO of IBM, was a senior executive at American Express (AXP), he sponsored and groomed a young, talented Black professional named Ken Chenault, who rose to become the CEO of American Express and one of the foremost leaders in recent history. Having someone with established social capital in your court is undoubtedly the biggest factor for increasing career mobility and ascending to the highest ranks. My own experience of being sponsored by Tom Nides at Morgan Stanley (MS) is a case in point. Only after he returned from serving as Deputy Secretary of State, I went from overlooked middle manager to fast-tracked high-potential executive despite having already delivered what some considered “spectacular” results up until that point.

The same recruitment and sponsorship tactics can help bring greater gender diversity to America’s boards and C-suites. In our consumer-based economy, women are the understated and underappreciated powerbrokers, controlling or influencing 80 percent of spending decisions. By 2028, women will account for 75 percent of all discretionary spending, so it stands to reason that greater gender diversity in C-suites and on boards will result in better product development that appeals to a rapidly growing share of purchasing decision-makers. One recent study found that women contributed an excess economic generation of nearly $9 billion in 2023. It’s time to channel that power for the greater good of our economy.  

Representation among entertainers and emissaries drives returns.

For the media, Black and Latine populations are big markets, spending a higher proportion of discretionary income than their white counterparts. Black people, in particular, have made enormously profitable contributions, in terms of spending, innovation, and performance excellence, to products and services in the creative, entertainment, and sports industries, but also regularly outpace other demographics when it comes to media consumption. It’s only logical that greater representation on screen will drive those numbers higher. In 2023, films with the least-diverse casts posted a negative median return on investment, while the top-grossing theatrical films with racially and ethnically diverse casts outperformed their less-diverse counterparts.

Film producers and casting directors need to be intentional about working with demographically diverse actors and ensure that any barriers to auditioning or filming in locations away from home are eliminated. Acting schools and colleges that offer performing arts degrees can play an important role in giving promising actors of color the opportunity to train and pursue careers in media entertainment.

Government entities and the universities that train their applicants can take the same approach to sourcing more diverse participants. On a geopolitical level, with the increased focus on “friendshoring,” Black and Latine executives can serve as excellent emissaries to leaders in Africa and South America. Greater cultural affinity, awareness, and respect can all cultivate trust in partnerships. Cost savings and greater control over supply chains and business continuity come closer to hand. 

Representation will be driven by shareholder engagement.

The New Paradigm, an approach to corporate governance in the age of stakeholder capitalism introduced by Marty Lipton and his Wachtell Lipton colleagues, sets forth an effective roadmap for boards and the shareholders they serve to pursue sustainable corporate profitability and growth. Stakeholder capitalism, which has overtaken the flawed shareholder primacy era of American capitalism, has been rightfully embraced by prudent investors and the Business Roundtable. It sensibly realizes that considering the interests of employees, customers, suppliers, and communities is mandatory for companies to maximize the long-term value and success of a company.  

Universal investors such as public pension funds, sovereign wealth funds, and multi-trillion institutional asset managers are bound by fiduciary duty to encourage boards to pursue that path. Authentic commitment requires engagement and other influence practices—including substantive communications, shareholder proposals, and signal-sending proxy votes when necessary—to maintain the board’s focus on all stakeholders for the good of sustainable business success.

Peltz’s failure shouldn’t be surprising when the economic data and other pro-enterprise value elements are considered. But his failure is not in vain because it is a very public lesson and an indication that the time has come to let go of destructive profiteering shareholder activist tactics and embrace shareholder engagement strategies that uplift people and increase value. The irrefutable evidence indicates such shareholder engagement has a greater likelihood of success for business, our country, the common good, and, therefore, democracy. That’s Patriotic Capitalism.