Disney decided to not build on the controversial resort site in Orlando after all. The company had previously announced plans for a “signature” hotel, which would have been Disney-branded and housed no more than 400 guests at one time. Instead, the company will be focusing its efforts elsewhere – including expanding their parks with new rides like Star Wars: Galaxy’s Edge
“Who are Disney’s Stakeholders?” is a question that many people have been asking. The company has not confirmed who the stakeholders are, but some believe they are the guests of Walt Disney World and Disneyland.
Burbank, California is the headquarters of the Walt Disney Company.
Xavier Collin/Zuma Press photo
If the Walt Disney Company’s resistance to Florida’s new parental rights bill accomplishes anything, it may be to expose the “corporate social responsibility” movement’s false promises.
The extremely fair phrasing of the new Florida legislation, which Disney executives cannot tolerate, is highlighted in a Journal editorial:
In kindergarten through grade 3, school officials or third parties may not teach students about sexual orientation or gender identity in a way that is not age-appropriate.
The challenges that develop when firms veer from their fundamental objective of producing long-term value for shareholders are highlighted once again by Disney’s engagement in Florida politics. This column has been critical of the Business Roundtable’s plan to update its principles in 2019. All but a few of the CEOs of significant firms that make up the group’s membership agreed that year that a company should commit to serve a broader universe of loosely defined “stakeholders” rather than just shareholders.
The rewrite by the Business Roundtable was a mistake because serving the long-term interests of shareholders necessitates executives treating non-owners fairly—to attract and retain a talented workforce, to provide good value for consumers, to deal fairly with suppliers, and to respect the laws and customs of the countries in which a company operates. “Stakeholders,” on the other hand, are often activists pursuing political objectives that they were unable to convince voters to endorse and for which they will not be held liable. There’s no reason to prioritize their grievances above the needs of others. More than half a century ago, Milton Friedman, who would go on to earn the Nobel Prize in Economics, outlined the problems in such declarations:
What does it mean for a corporate leader to have a “social duty” as a businessperson? If this comment isn’t pure hyperbole, it must imply that he’ll behave in a manner that isn’t in his employers’ best interests.
This leads us to Disney CEO Bob Chapek, who seems to believe that certain “stakeholders” should drive corporate activity while others should be disregarded. Mr. Chapek’s signature may be seen on the Roundtable’s current policy:
Statement of a Corporation’s Purpose Americans need an economy that enables each individual to achieve success through hard effort and innovation, and to live a meaningful and dignified life. We think that the free market is the most effective way to create excellent employment, a robust and sustainable economy, innovation, a healthy environment, and economic opportunity for everyone. Businesses are critical to the economy because they create employment, stimulate innovation, and provide necessary products and services. Businesses create and sell consumer goods, assist national military, cultivate and produce food, provide health care, generate and supply energy, and provide financial, communications, and other services that support economic development. While each of our businesses has its unique mission, we all share a core dedication to our customers and partners.
The statement goes on to say that the following promise has been made:
Providing assistance to the communities in which we serve. By integrating sustainable practices throughout our companies, we respect the people in our communities and safeguard the environment.
Time will tell if Disney’s company is long-term viable. But how helpful and courteous is a corporation that tells Florida parents that they must accept state-sponsored gender identity education for their six-year-olds?
Mr. Chapek made a statement on behalf of Disney in March, after the parental rights measure had cleared Florida’s legitimately elected state senate, calling it a “threat to fundamental human rights.”
The provision of the Constitution granting government personnel the freedom to conduct sexuality lessons in kindergarten classes must have escaped this column’s notice.
Beware, voters and shareholders: Mr. Chapek also said that he would use Disney resources to push his corporate social agenda throughout the country:
We’re stepping up our assistance for advocacy organizations fighting similar laws in other states, starting right now.
Is he even interested in learning what those other nations’ “stakeholders” want for their children? Apparently not, which isn’t surprising considering his lack of regard for his Florida stakeholders.
Also, how does Mr. Chapek’s excursion into cultural politics assist Disney shareholders? Some investors may desire to sell their stock and instead invest in a company whose CEO exhibits corporate responsibility—to the shareholders.
This column has been updated to reflect that Mr. Chapek’s comment was made after the law had passed the Florida state senate but before it was enacted.
Mr. Freeman will present “WSJ at Large” on the Fox Business Network on Friday at 7:30 p.m. EDT. On Saturday and Sunday, the show will be repeated at 9:30 a.m. and 11:00 a.m. EDT.
“The Cost: Trump, China, and American Revival” is co-authored by James Freeman.
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(Lisa Rossi contributes to the compilation of Best of the Web.)
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The “funds holding disney” is a question that has been coming up more and more recently. Disney has not said anything on the matter, but it is likely they are waiting to see what happens with the new CEO.
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