You have read about Disney’s war against Florida Gov. Ron DeSantis and parental rights. Now, it appears that Disney is realizing the error of getting involved in America’s culture wars in order to boost its ESG rankings. Johnathan Turley writes in The Hill:
In recent filings, Disney appears to acknowledge that Smith’s invisible hand is giving the “House of Mouse” the middle finger. In a new corporate disclosure, Disney acknowledges that its controversial political and social agenda is costing the company and shareholders.
In its annual SEC report, Disney acknowledges that “we face risks relating to misalignment with public and consumer tastes and preferences for entertainment, travel and consumer products.” In an implied nod to Smith, the company observes that “the success of our businesses depends on our ability to consistently create compelling content,” and that “Generally, our revenues and profitability are adversely impacted when our entertainment offerings and products, as well as our methods to make our offerings and products available to consumers, do not achieve sufficient consumer acceptance. Further, consumers’ perceptions of our position on matters of public interest, including our efforts to achieve certain of our environmental and social goals, often differ widely and present risks to our reputation and brands.”
Disney and other companies have previously ignored consumer backlash over corporate campaigns such as Disney’s opposition to Florida’s Parental Rights in Education law. Corporate officials once avoided political controversies and focused on selling their products and services rather than viewpoints.
Disney has reportedly lost a billion dollars just on four of its recent “woke” movie flops, productions denounced by critics as pushing political agendas or storylines. Yet until now, the company has continued to roll out underperforming movies as revenue has dropped. What’s more, Disney stars persist in bad-mouthing its fabled storylines and undermining its new productions. The company admits that it has suffered a continued slide in “impressions” (that is, viewership) by 14 percent.
For shareholders, it may seem counterintuitive that corporate executives would trade off profits for political or social agendas. However, it does serve as a rationale for individual corporate executives who are professionally advanced when they champion such causes. For example, when Alissa Heinerscheid, vice president of marketing for Bud Light, pledged to drop Bud Light’s “fratty reputation and embrace inclusivity,” she was heralded by colleagues, even though her move went on to tank that brand as a whole. Indeed, Bud Light has still not recovered from the loss of billions in profits, market share, and overall market value.
Action Line: Companies should not be putting the political agendas of executives or the ESG departments of money management firms ahead of shareholder interests. Disney’s official recognition that doing so could have a negative effect on shareholders is step one in a long process toward reform. Let’s talk.
P.S. Read more about ESG’s impact on investors here:
- ESG Bankers Worried about Legal Blowback for Greenwashing
- Some ESG Chickens Come Home to Roost
- Presidential Candidate Calls Out ESG Agenda
- HOT POTATO: S&P Drops Its ESG Rankings
- Investors Souring on ESG
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