Target’s LGBTQ+ Pride Marketing May Be ESG Driven

Target is the latest corporation to face backlash for LGBTQ+ pride merchandise, in what is becoming known as “Bud Lighting.” With ESG becoming a divisive political issue, there is a natural tendency by some to blame everything inclusive on ESG. However, this is not without merit. Diversity and inclusion are key issues in ESG, and it is worth looking at corporate documents to see if there is a connection.

Environmental, social, and governance, or ESG, is a type of financial investing where factors beyond strictly financial matters are considered. Fund managers score companies based on varying and undefined factors. Companies also choose what actions they wish to highlight in their ESG report. Reporting standards are being developed in the United States, but for now companies rely on third parties to provide various metrics.

In the ESG debate, most focus on the environmental aspect. Measuring sustainability programs and environmentally friendly actions taken by a company. However, the social aspect 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.

Budweiser was one of the first to face serious backlash after releasing a limited run Bud Light can featuring transgender influencer Dylan Mulvaney. Conservatives were outraged, and the company faced a significant loss in business. There is reason to believe that Anheuser-Busch InBev, the parent company of Budweiser, took the action as part of a marketing campaign meant to bolster their ESG scores.

As to whether Target
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took the same course, we have to consider their prior behaviors as well as their 2022 ESG Report. Unlike Budweiser, which had a loyal following within conservative circles and a marketing campaign built on the patriotic symbolism which resonates with the right, Target has been more favorably aligned with the left and has a history of supporting LGBTQ+ issues. Target engaging in Pride Month activities is not out of character, having launched their “Wear It With Pride” line in 2012 and celebrating Pride Month every year since.

Looking at Target’s 2022 ESG Report, the company boasts a 100% score by 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. Their high score shows a very LGBTQ friendly company. Additionally, they were ranked #4 in DiversityInc’s 2022 Top Companies for LGBTQ Employees.

Target’s report also includes a focus on supplier diversity. Looking specifically at Pride Month and in their broader Pride clothing line, the company boasts that 59% of their “Pride assortment was designed with and by LGBTQIA+ creators and brands.”

Further, they state “we are proud to work with an ever-growing roster of suppliers that are at least 51% owned, controlled and operated by women, BIPOC, LGBTQIA+, veterans or people with disabilities.” However, the majority of their focus is on increasing the number of products from Black-owned businesses and spending more on services from Black-owned companies. This makes sense as ESG goals are about improving areas of weakness, and Target already had a 100% CEI score.

If Target was considering ESG in marketing decisions relating to LGBTQ+ merchandise, it was probably to maintain their already high scores. However, their choice to change course and remove some of the Pride merchandise will have the opposite effect.