ESG Weighing Down AT&T?

With the caveat that some may not care about costs or other implications, AT&T CEO John Stankey, speaking at AT&T’s annual meeting, uttered something telling. The third question asked at the meeting (share price first, then ownership of CNN) was about “AT&T engagement on public policy and political issues.”

The question in this instance appears not to have been asked about the routine operations of its regulatory staffs, but about environmental, social, and governance issues that have seemingly become pronounced. 

Noting the “tough” environment for ESG that is “as polarized and as caustic an environment as any of us have ever seen,” Stankey might have suggested that the burdens now are such that management time is diverted from AT&T’s other pressing issues.  

“I know I personally and the rest of the management team are spending a lot of time” on these issues,” said Stankey. He did not quantify how much “a lot” entails, but a reasonable person might infer that it is a non-trivial volume. 

That leaves less leadership bandwidth for other pressing issues, which for AT&T includes its equity valuation; its debt load; its position in mobile and fixed network markets and its growth initiatives. 

Few would question a proportionate attention to stakeholder issues more broadly defined than “shareholder value.” But shareholder value is a weighing mechanism that suggests how well AT&T is managing the effort--as must any on-going business or non-profit entity--to sustain itself for success in the future. 

And that was the first question asked at the annual meeting of shareholders, the “owners” of AT&T. We might all agree matters are “better” when shareholder value; employee interests; environmental impact and societal good all can be fostered. 

The rub is the balance of effort and impact on outcomes when an entity is under stress, as AT&T is, in a market that is changing substantially. This year AT&T broke a decades-long tradition of raising its dividend.

AT&T had raised its dividend for more than 30 straight years, as best I can recall. That ended in 2021, when the company broke tradition and declined to increase the dividend.

To be sure, AT&T has not yet taken the truly-disruptive move of cutting its dividend, a drastic move that would portend serious trouble with its core business model. But investors clearly are worried about that prospect. 

One might well suggest that time-consuming ESG matters should not be prioritized as they have been when sustainability of the enterprise is arguably the biggest issue.