The Walt Disney Company may prove to be a cautionary tale for CEOs who have sworn allegiance to the environmental, social, and governance (ESG) movement.
While it has become increasingly common for global clubs like the World Economic Forum and activist asset managers to pressure corporations to fall in line with the ESG agenda, Disney is now feeling the heat from the opposite direction: shareholders who want the company to focus on sales and profits, as well as its lagging share price.
Vivek Ramaswamy, co-founder and chairman of Strive Asset Management, told The Epoch Times that “Disney unnecessarily waded into a fraught political debate and hurt its business interests as a result.”
“It’s no surprise that shareholders are frustrated and now speaking up,” he said. “Other CEOs should learn their lesson: Focus on excellence over politics.”
As a shareholder, Ramaswamy is disappointed by the company’s public approval rating plunging from 77 percent to 33 percent, “an unprecedented collapse following Disney’s public embrace of controversial political positions in deference to social activists.”
Legal and Investor Headaches for Disney
One large shareholder recently brought a lawsuit against Disney’s management, stating that their political agenda has created “far-reaching” financial risks for the company. In a 22-page filing last month, investor Kenneth Simeone charged that “the financial repercussions from Disney’s actions, and resulting harm to the company and its stockholders, have been swift and severe.” Simeone demanded that management hand over records regarding its decision to fight Florida’s parental rights law as a possible precursor to further legal action against Disney executives.Last April, Reed Rubinstein, a former U.S. deputy associate attorney general and current senior counselor for America First Legal, penned a letter to Disney’s board on behalf of shareholders that demanded an investigation into the “wasting of corporate assets,” including the tarnishing of Disney’s trusted reputation for creating G-rated children’s entertainment, as well as potential violations of employees’ civil rights.
Rubinstein demanded that Disney’s board explain to shareholders its rationale for policies, including “why the company supports lessons on sexual orientation for five-year-old children, while simultaneously opposing parental notification” and how “adding queerness to children’s programming will enhance the company’s reputation.”
Poll: Americans Don’t Think Much of the ESG Agenda
Further, the more the public becomes aware of the goals and impact of ESG policies, the less they seem to like it. A recent poll on Twitter by its new owner, Elon Musk, asked whether the World Economic Forum, one of the key advocates of the ESG movement and state-corporate collaboration, should control the world. Of the 2.5 million who responded, 86 percent said no. According to a poll taken in April last year, only 27 percent supported Disney’s position that discussions of sexual topics are appropriate in elementary schools.ESG presents itself as a risk-management tool rather than a political ideology, but one risk it avoids mentioning is legal risk. Besides pushback from shareholders and customers, “woke” CEOs may also find themselves in trouble for violating U.S. antitrust and civil rights laws.
Disney fired Chapek in November, bringing back former CEO Bob Iger, who, while having a track record of progressive activism himself, seemed to indicate a change of direction.
In response, DeSantis told Fox News host Tucker Carlson: “We didn’t drag them in, Tucker. They went in on their own, and not only opposed the bill, they threatened to get it repealed.”
Disney didn’t respond to a request for comment.