According to a new Deloitte study, two-thirds of CFOs say they are involved in driving sustainability strategies in their organizations, and more than half say their involvement has increased over the last year. Although the study suggests that CFOs are engaging with sustainability more than ever, it still seems that the CFO is perceived in many companies as a potential source of resistance to CSR programs.
There’s one company where this is not an issue at all – Disney. The CFO of Walt Disney is also responsible for the company’s CSR efforts. Since I’ve never had the chance to hear someone whose job includes both responsibilities, I looked forward to hearing Jay Rasulo, Senior Executive VP and CFO at Walt Disney Company, speak at the BSR conference. I’m happy to report that I wasn’t disappointed. The magic was definitely there.
When you listen to Rasulo, suddenly the combination of CFO and CSO in one person doesn’t seem that odd – after all, he explains, wearing these two hats allows better integration of sustainability and financial constraints. Not only that, but it seems to connect the dots in ways that help the company become more responsible and profitable at the same time.
Take the concept of citizenship. Many companies struggle not only with the most effective ways to exercise good citizenship, but also with defining the value citizenship creates for the company. For Walt Disney, the value was clear – citizenship is core to the Disney brand, and brand drives the profit of the company, Rasulo explained. People expect more from Disney and eventually you just can’t entertain people while ignoring the world they live in, he added.
Well said, but how do you do it, exactly? Disney, Rasulo explained, decided to focus on reducing obesity among children by promoting healthier food for kids. The idea was to use the Disney brand to make something that no company had done before – make healthy food fun and change kids’ perception about it. As Disney CEO Robert Iger said earlier this year, “the emotional connection kids have to our characters and stories gives us a unique opportunity to continue to inspire and encourage them to lead healthier lives.” The opportunity was definitely there and Disney decided to take advantage of it.
The company started by launching internal nutrition guidelines in 2006, aimed at giving parents and children visiting Disney’s parks healthier eating options. One example is the kids’ meals that include carrots and milk instead of fries and soda, unless parents ask otherwise. Disney found out the parents happily embraced these changes and in six out of ten times went on with the healthier option.
Disney continued later on with more programs and efforts that, among other things, resulted in the fact that today more than 85 percent of Disney’s licensed food portfolio consists of healthier options, including produce and low-fat dairy. The latest step Disney took was earlier this year when the company announced that by 2015 it will ban ads on its networks for fast foods and sugary cereals that don’t meet company’s nutrition standards.
It wasn’t as easy as it might sound and Rasulo said that Disney lost profits because of some of these changes, but at the same time these changes also created opportunities, such as launching new product line of healthier food for kids. What is clear, is that the company was able to define for itself what it means to be a positive force and find the balance of using its power to help change consumer behavior without becoming a “nanny company” preaching about healthier food.
This focused perspective also helped the company to address other challenges. Rasulo told the audience about how Disney tried to balance its commitment to the environment with its business expansion targets. In 2008, the company was expanding its cruise ship business, while announcing on a long-term goal of zero net direct GHG emissions. The company chose to pursue this goal by instituting an internal carbon tax on the different business units, which was used to purchase carbon offsets. The idea wasn’t only to net zero emissions, but as Rasulo explained to make the units take GHG emissions into consideration in planning new operations and incentivize innovation.
Would these efforts look any different or generate different results if Disney’s CFO wasn’t responsible for CSR efforts? It’s hard to tell, but Rasulo definitely makes a compelling argument for putting the two functions under one roof.
One point he brought up that clarifies his perspective is that investors (with the exception of SRI funds) are not really that interested in all of these sustainability efforts. When CSR efforts don’t show immediate results, you need someone that will talk with shareholders and explain to them how acting responsibly is key to the Disney brand, and that any damage to the Disney brand from CSR shortcomings could harm profitability. Now, let’s be honest – isn’t it much easier when the person making this case is none other than the company’s CFO?
Raz Godelnik is the co-founder of Eco-Libris and an adjunct faculty at the University of Delaware’s Business School, CUNY SPS and the New School, teaching courses in green business, sustainable design and new product development. You can follow Raz on Twitter.