#wokecorporation

You have a choice how to burn your superannuation

Signals like this make CM smile. In what is already a crowded trade, on what basis is it worth shoving more struggling retirement dollars into over valued virtue signaling companies with dim prospects in the coming cycle? Better off rolling tobacco in $5 bills and setting it alight.

As CM wrote last week, tobacco companies (amongst the least ethical) have chronically underperformed and in a market fighting with macro contagion risk, high-yielding stocks that are despised make a lot of sense when money comes looking for mean reversion.

British American Tobacco (BTI) is trading at $36.29 almost half the level of two years ago. Now at 1.02x book value and a 7.3% yield.

Philip Morris Int’l (PM) is at $71.20, down from $122.90 in 2017. A 6.4% dividend yield.

Imperial Brands (IMBBY) at $26.58 down from $55.55 in 2016. A 9.2% yield.

JT is less than half its 2016 number trading at $21.36. A 6.45% yield.

Philip Morris doesn’t have a vaping business but it appears with all these bans in NY etc that nicotine-addicted vapers will switch back to the old school.

No one will ever invite you to a decent dinner party again if you mention that you have a super fund that is up to the gunnels in woke corporations.

Buy tobacco.

Qantas & Virgin answering questions nobody is asking

Qantas CEO Alan Joyce and Virgin CEO Paul Scurrah have told the National Press Club that part of the role of their businesses is to back social issues. Puhlease.

Have shareholders overwhelmingly voted in favour of Joyce deploying their funds to sponsor woke causes? No one is stopping Joyce from pushing whatever virtue signaling he likes in his own time, but he probably might reflect that most of his customers haven’t requested to be lectured on board. Scurrah is the newbie, so he seems to want to score some media attention.

The latest excuse to push this corporate social nonsense is the unfounded research that kids of today require their corporates to have these woke causes embedded in the culture for them to join. What happened to “employer of choice” based on the business model? Will budding pilots want to pick the airline with the best conditions and business survivability or that which has the best carbon offset programme? Truth be told, what young ecomentalist university graduate wants to join an evil carbon dioxide producing airline anyway?

Having said that, employee retention will not favour wokeness when pay and conditions remain crimped by misguided company policy vs more attractive opportunities at firms that focus less on this. Harvey Norman is exhibit A on that measure. It is crushing the competition.

Qantas only needs to look internally at its own carbon offset program and how dismal it is. While it might be the world’s largest, truth is around 2% elect to pay for the sin of flying.

Back in May 2018, CM noted, while waiting in the lounge,

“So to offset my flight to Haneda, CM would pay $11.21 AUD. CM can put it to ‘local action’ (fund activism?), ‘developing communities’ or ‘global renewables’. In its 2017 Annual Report, Qantas boasted,

We have the world’s largest airline offset program and have now been carbon offsetting for over 10 years. In 2016/17, we reached three million tonnes offset.”

Carbon calculators tend to work on the assumption of 0.158kg CO2/passenger kilometre.

In the last 10 years Qantas has flown around 1 trillion revenue passenger kilometres. While the literature in the annual report denotes one passenger offsets every 53 seconds, the mathematical reality is simple – 2% of miles are carbon offset. So that means that 98% of people couldn’t care less.

Perhaps more embarrassing is that The Guardian noted in Jan 2018 that,

Qantas [was the] worst airline operating across Pacific for CO2 emissions

Kind of a massive load of hot air when you do the maths!

Mr Joyce might earn $24m p.a. CM would reckon shareholders would be glad to hike that if he ditched the social justice nonsense.

Qantas service is rarely anything to rave about so more effort applied in that area could well serve the company’s (and shareholder’s) interests far better than answering question hardly anyone is asking.

Icelandic double standards on LGBT

Well done Iceland. How woke to stoop to childish antics and show open disrespect to the deputy leader of the most powerful nation in the world. Do the Icelandic president and corporations honestly believe that trolling Mike Pence (regardless of his personal beliefs) with rainbow flags and bracelets will somehow make him change his views or persuade those that support him to abandon him? So the way to show the moral high ground is to seek to diplomatically humiliate.

Here is betting that the Icelandic leadership and business community don’t fly the rainbow flag when dignitaries from Pakistan, Guyana, Saudi Arabia, Iran, Myanmar, Brunei, Malaysia, Indonesia, Sri Lanka or Egypt visit, a small selection of countries that criminalize LGBT activity, unlike the US. Of course, Iceland has received glowing accolades for the stunt on Twitter which probably speaks volumes of credibility. This is what cowardice looks like.

Human Dignity Trust lists the following stats with respect to the criminalisation of LGBT people.

72 jurisdictions criminalise private, consensual, same-sex sexual activity. The majority of these jurisdictions explicitly criminalise sex between men via ‘sodomy’, ‘buggery’ and ‘unnatural offences’ laws. Almost half of them are Commonwealth jurisdictions.

44 jurisdictions criminalise private, consensual sexual activity between women using laws against ‘lesbianism’, ‘sexual relations with a person of the same sex’ and ‘gross indecency’. Even in jurisdictions that do not explicitly criminalise women, lesbians and bisexual women have been subjected to arrest or threat of arrest.

12 jurisdictions in which the death penalty is imposed or at least a possibility for private, consensual same-sex sexual activity. At least 6 of these implement the death penalty – Iran, Northern Nigeria, Saudi Arabia, Somalia, Sudan and Yemen – and the death penalty is a legal possibility in Afghanistan, Mauritania, Pakistan, Qatar and UAE. Executions have been reported in ISIS-held territory in Iraq and Syria in recent years.

15 jurisdictions criminalise the gender identity and/or expression of transgender people, using so-called ‘cross-dressing’, ‘impersonation’ and ‘disguise’ laws. In many more countries transgender people are targeted by a range of laws that criminalise same-sex activity and vagrancy, hooliganism and public.

Iceland trades with many of these anti-LGBT countries. Perhaps Iceland should put an embargo on those nations. Why not ditch 6.8% exports and 5.8% imports with the US if they feel such abhorrence against America?

Here is a picture of Ambassador of Sri Lanka to Iceland, Prof. Arusha Cooray with President Gudni Thorlacius Johannesson of Iceland. Sri Lanka a country that can imprison someone of LGBT background for 10 years. Maybe corporate Iceland didn’t get the memo to fly LGBT flags? Ambassador Cooray and President Jóhannesson discussed the potential for increased collaboration between the two countries in the areas of tourism, fisheries, tea, arts, culture and sports. Wait, no discussions on LGBT Mr President?

Ambassador of Sri Lanka to Iceland, Prof. Arusha Cooray with President Gudni Thorlacius Johannesson of Iceland.

The greater irony is that Mike Pence’s boss has openly advocated that nations which criminalise LGBT seek to repeal such human rights violations.

And yes, President Trump is hardly the high watermark as goes diplomacy. That doesn’t mean two wrongs make a right.

The Woke will end up being the Joke – as usual

Do the marketing departments of these corporations honestly believe they will gain anything via this ill-considered moral preening? Do they have any real cohesive cognitive plan outside of vacuous virtue signalling to appeal to an existing or potential client base that has already moved on?

What is the bet had Alan Jones told PM Scott Morrison to shove a sock down President Trump’s throat that they would have said absolutely ZIP. Maybe they’d up the spend? The double standard is guaranteed. What it really says is that the marketing teams are pandering to their bigger client – trying to appear relevant to their own management team. Such gutless and spineless actions speak volumes of the utter uselessness of marketing teams in general.

Before dozens of woke corporations pulled their adverts from the top-ranked radio jockey, did they ponder for one second that their clientele who listen to him probably haven’t collapsed into an inconsolable heap? What is more, they couldn’t care less what Anytime Fitness, Chemist Warehouse or Big W think.

It doesn’t take much imagination to work out the utter brain dead groupthink in these marketing meeting rooms (echo chambers) of corporate Australia as they seek to self-censor to justify their glaringly redundant roles. No rocket science is required. Big W could have had a special campaign on socks and BBQ charcoal. When did Australia lose its sense of humour? Especially at the expense of our neighbours across the ditch. It is not to condone Jones’ remarks but it is only because NZ PM Jacinda Ardern is the high priestess of woke causes that these corporates have buckled.

If the decision to advertise on Jones’ program was made because of his reach and ideally the “right” demographic for their products, will they stand to gain anything from this? Haven’t they studied Gillette’s latest 180-degree flip on trying to win back customers they have probably lost for good in that ridiculous self-inflicted $8bn brand destruction?

The Jones’ clientele is likely to remain exactly the same. The ratings will unlikely budge a jot. The activists moaning to have ads pulled are probably the least likely to use their products and services in any case.

For instance, why would anyone think that Commonwealth Bank (CBA), which has been found seriously wanting in the ethics department after the Royal Commission, has any leg to stand on over Jones’ remarks? CBA is still pondering what to do. Do they follow the herd (proving marketing departments aren’t warranted) or twist 2GB’s arm to get some bonus slots for showing loyalty?

Here’s an idea. Why don’t CBA and others leave the moral grandstanding to their customers? When people withdraw cash at an ATM it is highly unlikely they’re going to punish them by closing their accounts. Why not keep tabs on the number of complaints from its 10m customers and see if they number more than 0.000001% of the total. Don’t marketing departments use data? Clearly not.

So watch this space. Corporate boardrooms might think their marketing teams walk on water but if they opened their eyes for a moment would soon find their utter lack of creativity and zero value add as clear as crystal. Or maybe they’re just as out of touch to fall for the Yes, Minister PowerPoint presentation.

Look at the bullying by groups such as Mad Fucking Witches. Can corporates take activists seriously with names like that? How weak are they to fold when words like “complicit” are thrown at them. Once again marketing departments should study data, not fear standing up for themselves.

The double standards of companies like Koala Mattresses, which is happy to have the potty-mouthed Clementine Ford as a brand ambassador (who has a long track record of tweeting profanity, misandry and killing all men) but preach sanctimonious tripe over pulling advertising from Alan Jones’ program.

Make no mistake. The woke are already looking like the bigger joke. These self-appointed enforcers of a moral points system President Xi might approve of have even ignored Jones’ unconditional apology for his remarks. Tells you exactly what ideology is being preached inside so many Australia’s companies. It is hardly the stuff that will rescue them in a slowdown. The ones which have cut Jones have signalled why they don’t make good investments. Get woke. Go broke.

NB Mad Fucking Witches deleted this post because as always with the radical left the only free speech that matters is their own.

2/3rds of Rugby Australia cash would disappear

Folau.png

Rugby Australia’s (RA) CEO Raelene Castle says that the franchise can weather paying out Izzy Folau’s $10m claim. Although CM is not sure that paying out $10m + costs which would wipe out almost 2/3rds of the $18mn in cash on the balance sheet is something a CEO would think is worth boasting. What she needs to focus on is the declining operating performance.

Hopefully, Chairman Clyne will get his CEO to focus on NZ Rugby (NZR) as a benchmark.

RA took in approximately A$30m in licensing and sponsorship last year. NZR raked in A$65m. More than double for a country with one-fifth the population. Think about it. The advertising base is smaller yet the sponsors must see the returns as superior to do so.

Total revenues for RA sum to around A$110m. NZR takes in A$182m in 2018.

Matchday revenue for RA reached A$20m last year. NZR collected A$28m.

Total assets for RA sum to A$69m. NZR total assets are A$183m. Total equity for RA is A$27m vs NZR at $99m.

Perhaps understanding why the Wallabies franchise saw a 20% fall in revenues in 2018 is a bigger issue. Expenses fell 15% mainly due to slashing Super Rugby team costs in half and player costs by 33%. Without that, the company would have sunk deep in the red.

RA needs to focus on growth not cut itself into oblivion. When it prioritizes its customer base rather than put precious resources into virtue signaling and diversity programs the board wouldn’t need to park 2/3rds of the cash to cover up their catastrophic lack of judgment.

Nonetheless good to know Castle sleeps easy at the thought of losing such magnitudes.

Gillette – from toxic masculinity to transgender & morbid obesity

Gillette is free to advertise how it wishes. After the monster backlash against the toxic masculinity campaign which wiped 6% in value from the brand and caused a 22% fall in the following quarter’s profits, it is hard to see how the radical social justice warriors in the marketing department have not been fired. To shareholders, it was a massive fail. A YouGov poll of household grooming products before the campaign saw Gillette fall from 7th out of 45 brands to dead last after it. Yet the company has chosen to bet the house on more virtue signalling hoping it will eventually cut through to the masses. Get woke, go broke.

While there is absolutely nothing wrong with a transgender kid shaving for the first time, most will likely see this ad as nothing more than Gillette doubling down on the roulette wheel of “identity politics”. What point is Gillette trying to prove? The bulk of society is growing tired of being told how to think and what to say.

Yes, there are serious transgender issues in America. 130 transgender people have been murdered since 2013. It is a damning statistic. However, it is unlikely that anyone small minded enough to commit such a heinous crime will be swayed by a Gillette ad featuring a trans actor. Why does Gillette seek to force feed its version of socially acceptable behaviours on the 99.9% of its clientele that does not require it? It is patronising in the extreme. It is like attacking NRA members as murderers.

The only company in the world that can treat its customers with disdain is Ferrari. It wields so much power that it selects customers if they are deemed worthy of owning some of its limited edition offerings. Sadly Gillette is not Ferrari.

Gillette is rife with double standards. It has brazenly sponsored a Dutch racing car series with the brand embossed across the backsides of supermodels.

Chick-fil-A, on the other hand, was established on its Southern Baptist principles. It has never hijacked a social movement to boost sales.  That is why it has seen sales treble on a doubling of stores to become the third largest fast-food chain in America. It never rams its beliefs down the throats of others.

The toxic masculinity campaign should have been a big enough lesson for the marketing team to stay in its lane. The consumer spurned Gillette at the supermarket cash register. It would have been better coming out and apologizing and praising men for all the good things they do, like the Egard Watch company.

Virtually no customers will see that trans ad and think to buy Gillette razors out of a sense of moral guilt at the treatment of this minority. Consumers buy razors to groom – period. When will the company get it?

Related image

It wasn’t so long ago that Gillette promoted a morbidly obese woman to push female shaving products. There is a difference between standing against fat-shaming and being realistic about the many chronic health issues and massive costs related to obesity.

The American Medical Association (AMA) wrote, “the nation’s obesity rate is approaching 40% after holding around 34–35% between 2005 and 2012, according to data in The State of Obesity: Better Policies for a Healthier America 2018. No state has had a statistically significant drop in its obesity rate in the past five years...the National Health and Nutrition Examination Survey (NHANES) showed that 39.6% of adults and 18.5% of children ages 2 to 19 in America have obesity, the State of Obesity report noted that “these are the highest rates ever documented“…the AMA is working to prevent and control chronic diseases, many of which are associated with obesity…”

We covered obesity in the previous post. Obesity increases the risk of developing type 2 diabetes, high blood pressure, heart disease, stroke, arthritis, sleep apnea, liver disease, kidney disease, gallbladder disease, and certain types of cancer yet Gillette wants to celebrate it as something to be proud of.

Corporations that pursue woke marketing risk alienating their customers. There is no upside to it. Consumers are not stupid and the more companies run campaigns that fly in the face of their intelligence, will only get a backlash at the point of sale.

Don’t forget that the toxic masculinity campaign had a 10:1 negative response ratio on the millions of views it had. One can be sure Gillette will try to massage a positive response on this latest campaign. Yet, like most polls, the most accurate measure is consumer response. If sales aren’t arrested, no matter how many positive clickbait statistics they can show their bosses internally, the sales and profit figures won’t lie. That is all that ultimately matters to P&G shareholders.

Go woke, go broke

Yet another example of why CM has cancelled his FT subscription. Where is the critical reporting? This article by Pilita Clark doesn’t critique the ridiculous movement by corporates to virtue signal but falls in line with the stupidity.

Maybe the best metaphor for the woke corporation is parsley. It often looks nice as a garnish but 99.9% of us push it to the side of the plate and leave it to be thrown away.

Corporate hypocrisy is everywhere.

Take Josh Bayliss, CEO of Virgin Group. He says,

“It’s definitely true that right now every one of us should think hard about whether or not we need to take a flight.”

Why doesn’t he close down the airlines in the portfolio? Instead of waiting for his customers to grow a conscience and do the right thing why not force their choice? The obvious answer is that it’s hypocritical.

Airlines operate on about 70% capacity load factor break even so if Virgin flights end up being half full he’ll only end up spewing more or less the same CO2 per flight and go out of business. British Airways, EasyJet and Ryanair will welcome Virgin’s virtue signaling. Go woke, go broke.

Qantas has the world’s largest carbon offset program yet only 2% of passengers elect to pay. That’s the extent of the belief in global warming.

Blackrock’s chief Larry Fink said his asset manager needs to do more than just make money yet it only backed 10% of the climate related shareholder proposals. Why? Supposedly because they would crush profits. All talk, little walk.

BP surprisingly helped prevent a carbon tax it openly launched support for. A fossil fuel company trying to undermine a carbon tax? Wow. Who’d a thunk?

UK shadow chancellor John McDonnell has said Labour would seek to delist companies from the London Stock Exchange that didn’t meet their climate change commitments. In order to meet that, will that mean a child daycare company will be burnt at the stake for not brainwashing kindergarten kids? Will there be a minimum pot plant to child ratio?

How would regulations impact the myriad of different businesses that would trigger being dumped from the LSE? What standard would be applied? CM is betting corporates jus need to “file” a governance statement on climate change which no one will read. As long as 100% of companies file, nothing will happen.

Pretty easy to avoid too. Companies could list on Nasdaq or the Singapore exchange to avoid the regulations and still raise capital. Did you think of that Mr McDonnell? No because it is all about being woke and there are plenty of alternatives to dodge stupid policy. Capital is global.

Pilita Clark closes her article by saying,

“Yet the climate debate is shifting and I am willing to bet that companies failing to match their green claims with solid action face far greater risks than they ever have before.”

Like much of the climate religion, few hard facts are ever presented except the date we are all supposed to die. Even then that is an ever-shifting goal post. We can be assured that when 2028 arrives all of a sudden we’ll have another 12 years to do something. A bit like the joke where a patient asks his doctor how long he has to live and is given an extension so he can pay his bill.

The ever-growing tide of the “woke” corporation is going to thwart ingenuity and entrepreneurship. It is corporate suicide to pander to this nonsense. It is not for companies to bang on about their wonderful commitments. Customers and shareholders can decide for themselves. Maybe if companies listened to both groups they would find profits go up. People are growing sick and tired of being told what to do. How to think.

The world is littered with corporate wokeness backfiring. The irony is much of it is self-inflicted. By trying to create false images of virtue, the results have been disastrous.

P&G had to write off billions from its Gillette brand for the toxic masculinity campaign. Before the campaign Gillette was ranked 7th out of 45 health and grooming brands. After, rock bottom.

There is almost a wave of corporate fear twisted by a minority of social activists like Sleeping Giants which create false narratives about public perceptions of evil companies. There is a flip side.

Chick-fil-A was established by Southern Baptists. They don’t ram their Christian beliefs at all in the restaurants. Activists tried to boycott the fast food outlet because one of the directors personally didn’t support same-sex marriage. Guess what, store numbers have doubled and revenues tripled over the last decade.

Chick-fil-A states it’s mission is, “To glorify God by being a faithful steward of all that is entrusted to us. To have a positive influence on all who come in contact with Chick-fil-A.”

Chick-fil-A is notable by its closure on Sundays, Thanksgiving and Christmas. So people are well aware ofthis corporate backing its religious beliefs.

There is a difference between founding a company on certain beliefs and concocting them to ride a wave of hijacking social movements. Customers are aware of the difference.

Virgin Group can wax lyrical about its concerns in trying to save the planet but the only woke thing would be to shut down. Pushing the guilt back on its customers shows how hypocritical the airline is.

To be honest it gets tiring waiting in corporate lobbies watching flat panel TVs advertising all of the wonderful community things they do. 99% of the transaction with any corporate will be driven by the ability to deliver goods and services, not supporting tree planting. It is not to diminish charity or good intentions, rather to cut back on acting as though they’re angels to avoid being put on an imaginary naughty step that doesn’t exist.

Perhaps CM should recommend a portfolio of non-compliant ESG companies. When the market sells off, all the passive money in ESG compliant names should well underperform those that don’t. Perhaps an asset manager should establish an ETF with a basket of companies that just provide product or service rather than garnish it with lashings of corporate virtue. Here is betting it would be a contrarian winner.