Republicans are escalating their legal threats against Target, pressuring the company to remove merchandise for transgender customers and backtrack on its initiatives to hire minorities and diversify vendors.
In singling out Target, GOP lawmakers and right-wing social media personalities are sending a larger warning to corporate America to roll back recent diversity and inclusion policies, analysts say.
"Target is a high-profile company, one of the biggest, so if you want to make a statement this would have that impact," said Julian Zelizer, a professor of history and public affairs at Princeton University and a CNN political analyst.
He said pressure on Target could be an effort for the GOP to appeal to its base. Although there isn't always a clean political connection with corporate targets, Target in the past has been linked to "coastal upper middle-class America, an alternative to Walmart. So I think this is part of the same anti-Democratic elite rhetoric that we see," Zelizer said.
Arkansas Sen. Tom Cotton, a leading Republican who considered running for president, wrote a letter last week to Target saying the company's Diversity, Equity and Inclusion (DEI) pledge in 2020 to increase Black employees by 20% and invest more than $2 billion in Black-owned businesses was racially discriminatory.
Target first began its diversity initiatives 20 years ago and added new policies in 2020. But Cotton's letter came in the wake of a Supreme Court ruling that gutted affirmative action in college admissions, saying colleges and universities can no longer take race into consideration as a specific basis. Cotton cited the Supreme Court decision in his letter.
The decision ended a long-standing precedent that has helped Black and Latino students gain access to higher education.
Andra Gillespie, a professor of political science at Emory University, noted that Walmart, Target's chief rival, was headquartered in Cotton's home state of Arkansas.
"It's virtue signaling. He's taking on a culture war issue. He's going after a company that has already been targeted by Republicans and joining the pile-on," she said.
Also last week, Republican attorneys general in seven states wrote to Target warning that merchandise in its Pride month product collection could violate their states' child protection laws.
The letter followed an anti-LGBTQ campaign against Target that went viral on social media. Fueled by far-right personalities, the anti-trans campaign spread misleading information about the company's Pride product collection and its business practices. Target subsequently chose to remove certain items that it said caused the most "volatile" reaction from opponents.
Target did not respond to comment on Sen. Cotton or the attorneys general letter. But Target has said its employees have endured threats over the Pride Month collection and that the company stands by the LGBTQ community.
Hurting brands' sales and reputations was the stated goal of the campaign against Target: "The goal is to make 'pride' toxic for brands," said right-wing commentator Matt Walsh, who promoted the boycott, on Twitter. "Our campaign is making progress. Let's keep it going."
Pressure on Corporate America
Corporate America has tried to become more inclusive in recent decades in response to changes in American lifestyle and culture.
Particularly after the May 2020 murder of George Floyd by a Minneapolis police officer, companies like Target rolled out policies aimed at diversifying their workforces and welcoming customers from all backgrounds.
"It's helping us drive sales, it's building greater engagement with both our teams and our guests, and those are just the right things for our business today," Target CEO Brian Cornell recently told Fortune of the company's diversity and inclusion initiatives.
Many of these efforts are now under attack.
Right-wing groups have threatened boycotts against brands like Bud Light, Disney and Nike to roll back their inclusivity efforts. They've even gone after Chick-fil-A and Cracker Barrel, brands traditionally seen as conservative.
Companies such as Bud Light and Nike have been targeted over promotional campaigns featuring transgender people.
Disney has been caught in a protracted fight with Florida Gov. Ron DeSantis stemming from legislation he signed that prohibits teachers from discussing sexual orientation and gender identity in class, that critics dubbed the "Don't Say Gay" law.
The backlash against these companies comes amid a wave of legislation in Republican-led states to curtail LGBTQ rights and cut DEI programs in colleges and universities, alongside lawsuits to stop 401(k) managers from considering climate change and other environmental, social and governance (ESG) factors when selecting investments.
Chilling effect
This blowback is having an impact on corporate America.
Fewer brands posted in June about Pride Month on Instagram and Facebook this year, according to data from Emplifi, a software provider.
The number of U.S. brands using Pride-related hashtags on Instagram declined 16% year over year.
Corporate America has also grown silent on gun violence.
Companies rushed to strengthen gun safety policies after the mass shooting at a Parkland, Florida, high school, but few major companies have changed their policies related to guns in recent years.
Dick's Sporting Goods stopped selling semi-automatic, assault-style rifles at stores. Citigroup put new restrictions on gun sales by business customers. A year later, after mass shootings at a Walmart in El Paso, Texas, and a nightclub in Dayton, Ohio, Walmart ended handgun ammunition sales and said it would ask customers not to openly carry guns in its stores.
Such efforts to curb gun violence have run into fierce pushback from Republican lawmakers who oppose both gun restrictions and corporations taking on social roles.
And three years ago, diversity and sustainability were big talking points for executives at many big companies, and ESG funds.
But corporate interest in trumpeting these initiatives appears to have been short-lived. Just 74 members of the S&P 500 even mentioned ESG in their first quarter earnings calls, according to new FactSet data.
That's the lowest number since the second quarter of 2020 and a 23% drop from the same quarter last year.
Now, Republicans are stepping up their scrutiny on companies' diversity efforts in the wake of the Supreme Court's decision on affirmative action in college admissions.
Many companies emphasized diversity in the wake of high-profile killings of Black Americans in recent years, but those efforts have often failed to yield significant results, with the top ranks of the Fortune 500 still overwhelmingly White. The Supreme Court's ruling could limit underrepresented racial groups in many industries' hiring pools.
It is also likely to invite legal challenges to corporate DEI programs, as Cotton's letter to Target foreshadows.
