Reputation as Growth Driver: Disney and “Generation Green”

Chris Zwicke

Chris Zwicke

By Chris Zwicke, Erb MBA/MS student, class of 2012.

This blog entry is cross-posted on Triple Pundit.

With kids as one of its core demographics, The Walt Disney Company is obviously quite interested in what kids care about. Speaking at the Wall Street Journal’s ECO:nomics conference, Disney President and CEO Robert Iger discussed how kids as young as five are becoming increasingly concerned about environmental issues. It doesn’t stop with this “generation green.” Disney, like many other companies, has heard similar concerns from other customer groups, shareholders, and employees (current and potential). According to Iger, addressing the company’s environmental impacts is not only the right thing to do morally but the right thing to do for shareholder value. The business case boils down to brand value, based on the assertion that reputation can drive long-term growth.

But are customers willing to pay more for green products and services? The audience of mostly corporate execs pressed Iger on this several times. I am not aware of any studies that could convincingly challenge the consensus of doubt in the room on this question. However, while acknowledging that many customers shop for value (especially in a recession), Iger challenged the notion that everything that is better for the environment must also cost more. He suggested one way to lower costs on environmentally preferable products is to aggregate buying power, something Disney is beginning to pursue as a member of the Sustainability Consortium with Walmart.

For producers of media content, the lens of Corporate Social Responsibility can be turned to focus on the messages in this content as well as the business practices that lie behind their production. Asked whether he would veto a potential blockbuster because of negative environmental themes, Iger responded that from a long-term perspective this would likely constitute a brand withdrawal—i.e., damaging a reputation that takes years to develop and can create value far into the future.

On the other hand, for positive environmental messaging to be credible, a company must walk the walk in its own operations. A particularly intriguing initiative on this front is a tax that Disney charges its business units for their greenhouse gas emissions. According to Beth Stevens, senior vice president of environmental affairs, and Jonathan Friedland, VP of strategic communications, the proceeds from this tax go to fund carbon offsets and are charged at roughly the market rate. These offsets primarily come from a portfolio of forest conservation projects, selected for fit with the brand, cost effectiveness, and ancillary benefits such as wildlife and biodiversity preservation and community impact. The tax is also intended to serve as an emissions reduction incentive and it will be interesting to track its effectiveness here—one question is whether the cost of the tax is significant in comparison to the other performance metrics for the division. This tax approach seems novel; are 3p readers aware of similar initiatives in other companies? Let us know in the comments section.

As detailed in its latest CSR report, Disney is setting some lofty long-term goals accompanied by mid-term targets. Stay tuned in the coming weeks for an update to the report that will discuss progress towards these targets. One of the long-term goals is zero waste, with a 2013 target of decreasing solid waste to landfill to 50 percent of the 2006 level. Stevens says these targets are focused on direct operations but that a working group is currently investigating ways to minimize product footprint through the supply chain. Some explicit targets related to licensees and suppliers would be a welcome outcome of this process.

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