Tractor Supply realized that ESG and DEI demands are endless.
ESG compliance does not have to be the norm, and it is not inevitable.
I n late 2021, at the height of the obsession with ESG and DEI, Tractor Supply CEO Hal Lawton laid out his vision for what the “life out here” motto meant for this leading retailer of agricultural supplies. Lawton noted that “ESG has emerged as the universal standard for good corporate citizenship,” and affirmed that “Tractor Supply has the resources to take positive action and is committed to doing so.”
A skeptic might ask if emphasizing ESG and DEI initiatives was the only path forward for Lawton. To him, the options seemed clear: Comply with activist demands, or be the odd one out at the corporate ESG party. Apparently, it was better to accept the progressive agenda than face the inevitable backlash that follows standing up for shareholder value. Whatever Lawson’s motives, NASDAQ-listed Tractor Supply was seemingly destined for a leading position in the Fortune 500 rankings for advancing the new orthodoxy.
But recently, Tractor Supply pulled a complete 180-degree turn.
In a statement released on June 27, Tractor Supply announced the end of all of its DEI initiatives and emission-reduction goals. Its statement is a dramatic reversal of Lawton’s sentiments fewer than three years prior. Now, the company writes, “We have heard from customers that we have disappointed them. We have taken this feedback to heart.”
Make no mistake: This reversal by Tractor Supply is the boldest about-face we’ve seen. It is a major win for both shareholders and conservatives interested in corporate engagement. At Bowyer Research, we see how some of America’s biggest companies are turning away from DEI and ESG goals in favor of true fiduciary responsibility and a shareholder-first outlook. And Tractor Supply is a valuable case study of what rejecting ESG looks like at a practical level.
Last year, the company scored a 95 out of 100 on the progressive Human Rights Campaign’s corporate “equality” index (CEI); getting a high score requires companies to comply with a plethora of far-left demands, such as funding transgender-related surgeries for employees. Now, Tractor Supply is severing ties with the HRC. As a corporate-engagement firm, we’ve worked with companies who, when pressed, assert that they’ve never worked with the HRC despite the CEI being an explicitly opt-in survey. Tractor Supply is a perfect example of how that’s not the case, and the recent decision has highlighted how breaking with ESG activists requires an active choice on the part of a company.
We have engaged with Tractor Supply three times over the past year in our role as a proxy-voting consultant firm. First, we thanked them for not making public statements supporting abortion after the Dobbs decision, and we encouraged them to continue to stay out of that controversy. Second, we pointed out to them that the Claremont Institute had listed them as helping fund organizations that took them into politically controversial territory. Third, we warned the company to be cautious about “pride” promotion in June, with a special warning against any gender-ideology content involving minors.
One way or another, Tractor Supply got the message. They realized that ESG and DEI demands are endless, and responded in the most sensible way — getting off the activist hamster wheel.
The blowback against Tractor Supply swirls around a very predictable drain. Tennessee state senator Charlane Oliver lambasted the company, posting on social media that “choosing hate and bigotry by announcing this the same month of Juneteenth and Pride is nasty work.” After facing pushback, Oliver suggested that the critics of ESG and DEI are destined to be “in the history books as white supremacists.” (We can safely say defending the fiduciary duty owed to shareholders is not white supremacy.)
Rejecting ESG and DEI means taking nonsensical, noisy blowback from activists and legislators. Weathering such storms is part of the game when it comes to defending fiduciary duty and shareholder value. Tractor Supply had a realization: ESG compliance does not have to be the norm, and it is not inevitable. Hopefully, other companies will follow suit, or else they risk failing their shareholders and betraying their customers.
As we wrote about ExxonMobil last month, the way forward is the tried-and-true model of fiduciary responsibility: “Ignore the distraction of ESG radicalism, create value for the shareholders you actually work for, and the silent majority will stand behind your brand with confidence.”
Tractor Supply just took the plunge to defend that model — and for their shareholders, “life out here” just got a lot brighter.
Isaac Willour is a corporate analyst at Bowyer Research. He can be found on X @IsaacWillour. Jerry Bowyer is the president of Bowyer Research, the leading shareholder-first proxy consulting firm. He can be found on LinkedIn here.