I’m sure none of us enjoys our commute in the mornings. Whether it’s a 20-minute subway ride, an hour’s drive or something longer or more extravagant, the thought of setting up a teleporter to the office always seems enticing.
Spare your sympathy, then, for incoming Starbucks CEO Brian Niccol, who is facing criticism from environmental activists for taking up the company’s offer to commute 1,000 miles via private jet – from his Newport Beach, California home to the firm’s Seattle headquarters – rather than relocating.
Critics have already highlighted the potential discrepancy between Starbucks’ self-proclaimed green and social credentials weighed against enabling this mega-commute. While investors have stayed out of the row so far, I wouldn’t expect them to be quiet for long.
For one, there is a steady stream of activist money flowing into the coffee company. In the run-up to Niccol’s appointment, both Elliott Management and Starboard Value built sizable positions in Starbucks and reportedly worked to bring in the former Chipotle Mexican Grill man to help the company bring down costs and re-establish its brand equity.
Though the appointment was met with an immediate bump in Starbucks’ share price, investors may consider the reputational risk of Niccol’s 1,000-mile flights a little too caffeinated for their liking.
Second, that previously mentioned brand equity is low at time of writing. Dan Coatsworth, an investment analyst at AJ Bell, describes Niccol’s job as a ‘big challenge’. ‘This isn’t taking the reins of a business firing on all cylinders; it’s a repair job – which means being in the engine room at all times,’ he adds.
Though allowing him to take the three-hour flight is consistent with Starbucks’ hybrid working policies – which allow employees to work from home up to two days each week – it does set Niccol apart from the firm’s rank and file. It’s a bad message to send about the environment, sure, but a worse one to send to Starbucks’ customers and staff.
At a time when companies are widely criticized for ‘performative’ actions to boost their ESG credentials, this seems like a particularly poor decision.
That said, it may be that investors are starting to be OK with being seen to relax their ESG commitments. Earlier this week, BlackRock revealed that it has supported just 20 of the 493 environmental and social proposals put forward by shareholders at the annual meetings of the firms in which it invests – equivalent to just 4 percent. In 2021, that proportion stood at 47 percent of ESG-related resolutions.
The onslaught of economic headwinds, combined with the so-called ‘war on ESG’ or ‘war on woke’ led by Republican lawmakers and particular investors in the US, has no doubt forced BlackRock’s hand. But it also shows that if it or other large asset managers all renege on such issues, companies may well weaken their own policies (if not underpinned by other legislation, at least).
Whether or not the tide is turning against him, Niccol will feel the heat in the coming weeks. It’s just a question of whether that’s from global warming, investors or his ride to work’s jet engines.
What do you think? Have you noticed companies pulling back on ESG policies, or watering them down? Let us know your thoughts, either on LinkedIn or via email at [email protected]
