Good morning. Walmart Inc. made waves last month when the retailer announced it was rolling back many of its diversity, equity and inclusion initiatives. As a backlash against DEI programs grows in the United States, signs of resistance are emerging in Canada. More on that below, but first:
In the news
Tensions between the Prime Minister’s Office and Finance Minister Chrystia Freeland have emerged over the push for politically strategic spending measures such as the GST holiday, multiple sources say, risking the minister missing her pledge to keep the deficit at or below $40.1-billion.
In a speech to the Halifax Chamber of Commerce, Justin Trudeau said Ottawa would respond to tariffs imposed by the United States on Canadian goods, arguing that retaliatory measures were crucial to getting the Americans to back down during earlier trade spats.
The Healthcare of Ontario Pension Plan is preparing to allow self-employed doctors to join for the first time in January, giving incorporated physicians and their staff a new option to earn defined-benefit retirement income from one of the province’s largest pension funds.
Lundin Mining Corp. is selling two aging European mines for up to US$1.52-billion to Swedish mining company Boliden AB as it improves its balance sheet and raises cash to fund its South American copper growth strategy.
On our radar
- Markets are betting on a deeper interest-rate cut tomorrow from the Bank of Canada. But in a note to clients yesterday, TD Bank analysts said: “We are doubtful that we will come out of this week with any more clarity than we had heading in.”
- Maybe we’ll learn more from tomorrow’s inflation report in the U.S.
- China is making waves as it restarts its bullion-buying program and announces it has launched an anti-trust probe of market superpower Nvidia Corp.
Radha Curpen, the Vancouver-based Group Head of ESG and Sustainability at law firm McMillan LLP, said the key is asking: "How are we going to govern with the changing world?"Jennifer Gauthier/The Globe and Mail
In focus
A growing backlash to DEI reaches Canadian companies
Robby Starbuck won. When Walmart announced last month that it was rolling back most of its DEI practices, the Hollywood director turned conservative influencer credited his prolonged social-media campaign against “wokeness,” and the threat of having his followers hit the retailer’s sales ahead of Black Friday. The New York Times wrote that he “may have scored his biggest win.”
But before the retail giant blinked, Starbuck had already picked his way through an increasingly recognizable cast of proudly American brands. He started his campaign against in June, with a post titled “It’s time to expose Tractor Supply,” a company that calls itself the largest rural lifestyle retailer in the U.S. He urged his growing mass of social-media followers to boycott the store until it reversed its DEI hiring practices and ended LGBTQIA+ events and training, among a litany of phrases that have been deemed woke among the right.
Three weeks later, the company decided the threat of losing its conservative base of customers in primarily rural and red states was too great a risk, and announced an end to initiatives that businesses had rushed to put in place after the killing of George Floyd sparked a national outrage.
“We have heard from customers that we have disappointed them,” the Tennessee-based company said in a statement.
Conservative influencer Robby Starbuck at his home studio in Nashville, Tenn.ERIC RYAN ANDERSON/The New York Times News Service
After Tractor Supply came John Deere, Harley-Davidson, Lowe’s, Ford Motor Company, Molson Coors and Caterpillar Inc. In the span of a few months, the companies ended their DEI initiatives and cut their partnerships with Human Rights Campaign, an American LGBTQ advocacy group.
And then came Walmart, which announced at the end of November that it will no longer sell LGBTQ items on its website, nor fund its $100-million Center for Racial Equity, a non-profit organization it established after Floyd’s shooting.
Riding a wave of victories and energized by the election of Donald Trump as U.S. president, Starbuck says his next marks are Amazon and Target.
The activist has not set his sights on Canadian businesses. But as David Milstead and Jeffrey Jones report, those companies will find no respite “by simply being on the other side of the border.”
At a minimum, Milstead and Jones write, those with U.S. operations must navigate the new American climate. “Canadians might be tempted to dismiss Starbuck as an anomaly, a product of U.S. culture wars. But he’s one of the most visible faces of a full-scale war on environmental, social and governance policies and their subset of DEI practices.”
- To avoid losing business to anti-ESG policies, Royal Bank of Canada and Bank of Montreal, for example, have had to assure governments in Texas and West Virginia that they do not eschew lending to fossil fuel companies.
- In the case of BMO, it reversed a previously stated policy that restricted lending to new clients that operate significant coal mines or coal-fired power generation in favour of what it calls a “comprehensive, risk-based approach.”
There’s little reason to doubt anti-DEI sentiment will rise in Canada. Signs of resentment are already here: Alberta’s government opposes DEI and climate initiatives, and Pierre Poilievre, whose federal Conservatives are leading by a wide margin in the polls, is vowing to roll back the Liberal government’s signature climate policy. He also has a habit of branding things “woke” with notes of disdain.
Canadian companies might find they’ll at least need to consider rebranding ESG and DEI, to “avoid what have become damaged brands,” Jones and Milstead write.
Radha Curpen, the Vancouver-based Group Head of ESG and Sustainability at law firm McMillan LLP, said the political left sees environmental, social, and governance initiatives as vehicles for social outcomes, while the right thinks it means divesting fossil fuels.
“It’s none of that,” she said. “ESG represents the risks and opportunities that we face today. That’s what it is. The key is governance. How are we going to govern with the changing world? … We need everything in our toolbox to deal with it. We don’t have to call it ESG. It doesn’t matter.”
Charted
GDP in a free fall: Syria’s economic crisis
Syria’s economy was worth US$67.5 billion in 2011. By 2021, the GDP had shrunk by 85 per cent to US$9 billion, according to World Bank estimates.
Hundreds and thousands of deaths, global sanctions and the exodus of millions over nearly 14 years of conflict have destroyed what was already one of the poorest nations in the Middle East. Global leaders are calling the ouster of Syrian president Bashar al-Assad a chance for the country to rebuild. U.S. President Joe Biden called the Syrian government’s collapse a “fundamental act of justice,” but also “a moment of risk and uncertainty” for the Middle East. In 2022, the World Bank reported reconstruction efforts could bolster neighbouring Turkey’s construction industry and potentially lead to the restoration of its modest oil sector.
Morning update
Global markets were mixed as investor sat on the sidelines, taking cues from tech-led declines on Wall Street, weighed down in part by Nvidia, rather than building on stimulus-fuelled gains in China. Wall Street futures were little changed ahead of key inflation numbers tomorrow, while TSX futures inched lower as markets awaited tomorrow’s Bank of Canada’s interest-rate decision.
Overseas, the pan-European STOXX 600 was down 0.11 per cent in morning trading. Britain’s FTSE 100 dropped 0.5 per cent, Germany’s DAX rose 0.07 per cent and France’s CAC 40 gave back 0.52 per cent.
In Asia, Japan’s Nikkei closed 0.53 per cent higher, while Hong Kong’s Hang Seng fell 0.5 per cent.
The Canadian dollar traded at 70.58 U.S. cents.