It’s been roughly a week since Tractor Supply Company (TSC) issued the surprising company statement pulling back their DEI and climate programs/commitments. I’ve tracked reactions on various venues, most notably LinkedIn – which offer valuable learning moments for ESG/sustainability professionals. The lessons may not be what you want to hear, but they are something you need to hear.
The number of people reacting who know almost nothing about TSC – the company or its customer base – is surprising. One prominent ESG/sustainability guru for whom I have the utmost respect thought the company manufactures tractors like Caterpillar or John Deere. However, as mentioned in last Monday’s blog – “TSC is an 85-year old publicly-traded retailer with 2,200 locations, 50,000 employees and over $14B annual revenue. It calls itself ‘the largest rural lifestyle retailer in the U.S.’ and ranks 291 on the Fortune 500.” Think of them as feed store meets Northern Tools meets Academy.
Most reactions seem to be from white collar professionals living in suburbs or in urban, major metropolitan areas. I don’t know how many have ever been in a TSC store or have direct knowledge of TSC’s traditional customer base. Yet without having an understanding of TSC’s business, customers or revenue sources (i.e., matters that are “material” to TSC), these commenters decry the company’s announcement as wrong.
TSC’s decision apparently was made based on their assessment of materiality. Executives, management and boards are charged with making calls like this regardless of what outsiders think is right. Sometimes, outsiders win (remember Bud Light and Target?) and sometimes the company’s decision pans out (such as oil and gas companies could argue at the moment).
I may not agree with TSC’s position, but objectively I understand why they chose the direction. If they made a mistake, customers and employees will make that clear – some probably have already. Same thing if the company did make the right call.
It is disingenuous and inconsistent to argue for materiality determinations, then argue against the results when they don’t align with our opinions and prejudices. Sometimes, ESG won’t win. Here are questions for my fellow ESG/sustainability practitioners:
- How hard should a company push back against their customers to advance ESG?
- Are external ESG observers really in a position to argue against a company’s materiality determinations – especially when those observers don’t understand the company?
- Is it expected that every company faces the same ESG risks? If so, why do we bother with materiality determinations?
- How should we as ESG professionals react when a company’s materiality decisions are different from what we think they should be?
These are questions to consider whether you are in-house staff or an external advisor.
For the sake of transparency, I don’t directly own any stock in the company, nor do I know anyone who works there.
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