Target Must Face Shareholder Suit Over Pride Collection
Last Wednesday, a federal court refused to dismiss a lawsuit claiming that Target misled shareholders about the risks of its disastrous LGBTQ+ Pride Month campaign, Reuters reports.
The Allegations: Per the complaint, Target failed to warn shareholders that its “divisive and extreme ESG and DEI mandates” would likely incur backlash. When that backlash ensued, shareholders lost billions.
The Reasoning:
In upholding the complaint, the court relied heavily on a confidential witness who testified that “senior executives’ decisions to undertake the 2023 LGBT-Pride Campaign and make it more prominent were deliberate," and that Target’s corporate “mantra now” was to “stick [its] nose so far out. . . even at the risk of alienating certain customers.”
The court also noted that Target knew it was likely to face backlash over its LGBTQ+ activism given that it had previously faced backlash over its opposition to North Carolina's transgender bathroom law in 2016.
Blanket Disclosures Not Enough: Notably, the court rejected Target's attempt to rely on its blanket disclaimers, which stated that "Target’s responses to crises and our position or perceived lack of position on environmental, social, and governance (ESG) matters, such as sustainability, responsible sourcing, and diversity, equity, and inclusion (DE&I), and any perceived lack of transparency about those matters, could harm our reputation" and lead to loss in sales.
One-Sided Oversight Not Enough: The court also rejected Target's plea that its board properly oversaw ESG risk via its Governance & Sustainability Committee. "Plaintiffs insist that ... the Board only monitored risk from one side of the political spectrum," the court explained. And that one-sided monitoring did not suffice.
A Significant Risk: Over the past year, companies have been sued by employees claiming DEI policies constitute discrimination and states that believe such practices violate civil rights laws. Now shareholders are suing too. The Target case is thus one more reminder of how DEI and ESG activism isn't merely costly, but sometimes illegal.
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Master of Business Administration - MBA at University of Phoenix
1wYou’re in business to make money for the shareholders not push social causes. LGBTQ+ ESG DEI or DIE are the Neo-Marxist lefts way of rebelling against God and the family. The sexual lifestyle you want to live is yours keep it to your damn self and don’t mention to a child unless it’s your child period! This nonsense needs to be destroyed and business schools need to get back to basics.
Technology Marketing
2wShame, isn't it?
No Nonsense financial advice for Free Thinking, Freedom Loving people | Founder of hbria.com | Professor
2wThis is the way! There needs to be a tsunami of lawsuits against the management and boards, who need to be held personally accountable for forcing ESG and DIE disasters on their shareholders- a clear breach of fiduciary duty. Investment management firms who pushed these executives and boards to do woke nonsense should also face lawsuits.