You do not have to like Nigel Farage to recognize that he is one of the most consequential politicians of our time. He terrified the Conservatives into Brexit, first by founding a political party, UKIP, that campaigned for a referendum and then by founding another one, the Brexit Party, that campaigned for the full-strength version. Now he is taking a wrecking ball to corporate wokery.
A brief recap: Coutts & Co, a private bank that lists King Charles among its clients and is part of the NatWest Group Plc, decided that it no longer wanted Farage on its rolls. It claimed that it was removing him for purely commercial reasons — he no longer reached the financial threshold for maintaining an account of £3 million in savings or £1 million in investments — but when Farage obtained an internal document reviewing his case a darker story emerged.
The document, which Farage declined to share with Bloomberg, contained a detailed analysis of Farage’s political views and activities. It reportedly conceded that he had “had not been formally charged with any wrongdoing, that he had not been “subject to any regulatory censure,” and that he did not have any “known direct/indirect Russian connections.” But it also noted that he was a supporter of Brexit and a friend of Donald Trump. Then the killer line: “his publicly stated views were at odds with our position as an inclusive organization.”
Pandemonium ensued. The government announced that it is considering making free speech protections a condition of giving banks permits to operate. The prime minister, Rishi Sunak, tweeted that “no one should be barred for using basic services for their political views. Free speech is the cornerstone of our democracy,” and Elon Musk supported him with “Hear! Hear!” The economic secretary of the Treasury, Andrew Griffith, wrote to the heads of 19 banks and fintechs to summon them to a meeting and ask them to explain how they would make sure that customers are not “debanked” for exercising their free speech rights. In most businesses you can easily move to another supplier if your current supplier does not want you. But banking is much more like a utility — you cannot function in modern society without a bank account — and the largest shareholder in the NatWest group is the British taxpayer, the majority of whom, lest we forget, voted for Brexit.
NatWest’s chief executive officer, Dame Alison Rose, has now issued a (grudging) apology. But some conservatives would like to use Farage as a battering ram against woke just as they once used him as a battering ram against the European Union. The aim is simple: change the cost-benefit calculation that has led so many CEOs to adopt woke policies by massively increasing the costs.
Companies turned to woke politics in the aftermath of the twin shocks of 2016 — Britain’s decision to vote for Brexit and America’s to elect Donald Trump — and embraced it with renewed fervor when George Floyd was murdered in 2020. The calculation was that companies could no longer afford to continue with the old strategy of maximizing shareholder value and standing aloof from the culture wars if they were to avoid social breakdown. They needed to embrace stakeholder capitalism and endorse the cultural causes of the young.
Ken Frazier, the then-CEO of Merck & Co Inc, the pharmaceutical giant, declared that it was vital for companies to “stabilize society.” Jamie Dimon, the CEO of JPMorgan Chase & Co., the banking giant, used his annual letter to shareholders that “the problems that are tearing at the fabric of American society require all of us — government, business and civil society — to work together with a common purpose.” Larry Fink, the CEO of BlackRock Inc, insisted that “companies need to earn their social license to operate every day.” Almost overnight management consultancies, business schools and even accountancies forgot about “shareholder value maximization” and talked about building a “more just and equitable world.”
The problem with this is that corporate wokery has often produced the opposite effect from the one intended — undermining business by embroiling it in culture wars and alienating significant sections of the population. Conservatives, having previously only grumbled to themselves, are starting to fight back, on the grounds that companies will only change their habits if they are forced to pay a price for progressive activism.
The Farage affair is only the latest of a series of corporate embarrassments. The Disney Co. came to rue its support for corporate progressivism when it was caught between progressive employees, who wanted the company to oppose Florida’s new law regulating the teaching of sexuality to fourth graders, and Ron DeSantis, the state’s popular Republican governor. The fight cost the CEO, Bob Chapek, his job, and the company a corporate concession that allowed it to run a chunk of the state. A Bud Light promotion featuring a transgender social influencer, Dylan Mulvaney, sparked a boycott of the beer and sales dropped by as much as a quarter. The brewer put two marketing executives on leave which in turn infuriated LGBT employees. A North Face Inc. video featuring a drag performer sparked a boycott and Target Corp.’s LGBT retail displays provoked confrontations in stores.
Wokery can be risky for three big reasons. The first is that it provokes one of the most dangerous charges in any democracy — hypocrisy. CEOs inevitably provoke additional scrutiny if they set themselves up as moral enforcers, particularly if that morality takes the form of DEI (diversity, equity and inclusion) and ESG. Such scrutiny is far easier now than ever before given the ubiquity of social media, cameras and recording devices.
Yet many CEOs continue to operate according to the old rules even as they boast about embracing responsible capitalism. For all this support for stakeholder capitalism, Jamie Dimon is slated to earn $34.5 million this year in salary and bonuses. Disney wore its conscience on its sleeve on American racism but remained silent about the treatment of the Uyghurs in China when it filmed Mulan in Xinjiang. One reason why Coutts’s claim to value “inclusiveness” grated with the British is that the very essence of Coutts is its exclusiveness not just in purely monetary terms (that £3 million figure) but in social terms. The bank’s founder, Thomas Coutts, went to France during the French Revolution to rescue beleaguered aristocrats. Since then, Coutts has become so beloved of the Royal family that it even has a cashpoint in the basement of Buckingham Palace. It is a snob bank, or it is nothing.
The second is that it cedes control of the corporation to political activists. Corporate types frequently get carried away with progressively posturing in their bid to look cool to the young. Did Alan Jope, the recently retired CEO of Unilever, a company that makes uncontroversial products such as washing powder and shampoo, really understand the genealogy and implications of “intersectionality” when he talked fawningly of “the immutable laws of intersectionality”? Corporations now routinely nurture affinity groups only to see them taken over by the most radical elements. Nike found itself on a rollercoaster when it decided to employ Colin Kaepernick, an opinionated football player, to promote its sneakers. In 2019, the company celebrated Independence Day by launching a shoe carrying the Betsy Ross flag — a symbol of resistance against King George III. The company then withdrew the product when Kaepernick dubbed it “racist” only to encounter a firestorm of protests from Middle America.
The most important problem is that most CEOs are not very good at politics — or at least democratic politics as opposed to corporate politics. They are primarily trained in business principles rather than political theory or practice — that is, in getting things done within the context of hierarchical structures and easy-to-follow metrics rather than in debating values and appeasing noisy constituencies. Democratic politics is an altogether noisier and messier world.
Farage’s humiliation of Dame Alison Rose over the past week is a case in point. Rose is a citizen of London’s cozy corporate world, at once conventional and naïve. She has lent her support to worthy goals such as sustainability, diversity and women’s rights, leading a government review on barriers to female entrepreneurs and pledging finance for climate projects worth £100 billion. Even by the standards of big business, she has been an outspoken supporter of diversity: During Pride Month Coutts stood out among all the flag-waving businesses on the Strand by waving more flags and projecting the pride flag in its lobby, and the NatWest group has issued its employees with reversible lanyards so that they can change them according to who they are that day. She ventilated the now discredited idea that Coutts rejected Farage for purely commercial reasons when she found herself sitting next to a BBC reporter at a dinner.
Nigel Farage, by contrast, is a political animal who likes nothing better than mobilizing the resentment of “ordinary people” against the establishment. (Oddly lost in the news storm is the question of why this tribune of the people is so keen on banking with the King’s bank, and why, if his version is correct, he has so much money to play with.) He is a master of the media with his own program on GB News, a newish conservative channel, and a choir of supporters in the Daily Telegraph and the Daily Mail. He recognizes, like Christopher Rufo in the United States, that, in economically straightened times, virtue-signaling corporations are an ideal target.
Companies need to rethink the notion that adopting progressive values is the best way to legitimize their existence and stabilize society. Companies have no choice but to live with growing political risk. The world is becoming much more volatile as authoritarian politicians flex their muscles and domestic politicians tear up the neo-political rule book — indeed, you could say that volatility is becoming routine. Calculations that were once taken on purely commercial grounds must now be seen through the lens of great power politics and national influence-mongering.
Given the rise of unavoidable political risk, to embrace avoidable political risks by leaping into the cauldron of the culture wars seems foolish. Companies routinely argue that they can’t recruit talented young people if they don’t reflect their values. But even if this is true — and there is some evidence that the young are not as woke as corporate progressives think they are — there is no point in attracting talented people if you also alienate your customers. Older generations may have been wiser in enforcing a stricter division between work life and private life. Companies are on stronger grounds when they point out that today’s politics has a habit of overflowing its traditional boundaries: Meta has no choice but to engage in questions of free speech, for example. But there is a world of a difference between engaging with politics if you have no choice and deliberately beating a beehive with a stick.
Farage has done the cause of liberalism much harm by engineering Brexit and inflaming fears of immigration. But his current war on woke corporations may yet do something to advance the liberal cause. One of liberalism’s central aims is reduce the scope of politics by simultaneously lowering our sights (liberals believe that we must live with disagreements rather than try to create a perfect society) and sealing off many activities from political buffeting. Wokery is fundamentally illiberal because, by aiming at wholesale social transformation, it politicizes everything under the sun. The French philosopher Benjamin Constant warned that one of the great dangers with Rousseau’s notion of the general will was that it allows politics into every nook and cranny of life. Liberal constitution builders carefully created institutional barriers to the influence of day-to-day political passions. Robert Lowe, Britain’s chancellor of the exchequer in 1868-73, grasped that corporations could be added to these barriers: By freeing companies from state control and allowing them to pursue business opportunities for their own sake, he turned them into “little republics” that further limited the sway of politics over human affairs. Jamie Dimon and other business titans are certainly right that, in the wake of recent shocks, we need to think more deeply about how to secure and preserve business’ license to operate. But creating woke corporations that reflect the political passions of one section of society and infuriate everybody else is not the way to do it.
More From Bloomberg Opinion:
• Passed Over for a Black Man? The Data Disagrees: Kathryn Edwards
• New African American English Dictionary Could Change How We Work: Issac Bailey
• Which Corporate Diversity Efforts Are Now Illegal?: Noah Feldman
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Adrian Wooldridge is the global business columnist for Bloomberg Opinion. A former writer at the Economist, he is author, most recently, of “The Aristocracy of Talent: How Meritocracy Made the Modern World.”
More stories like this are available on bloomberg.com/opinion
©2023 Bloomberg L.P.