This week The Walt Disney Company released its 2010 Corporate Citizenship (or corporate social responsibility) report. The report is an engaging case study for understanding what Disney’s employees confront on a daily basis. It is both a quintessential American and globalized brand, a media company, a real estate trust, logistics company (if you include its cruise ships), and finally, Disney is also a manufacturer but mostly a gigantic licensing operation. With a tangled supply chain, properties across the globe, and a media company spread from the Internet to local television stations, Disney’s organization has countless points at which something can go awry: and in this age of “gotcha” blogging and journalism, it takes only one wayward supplier, contractor, employee, or manager to spark an enormous headache.
The 2010 Corporate Citizenship report is a frank discussion of the challenges Disney faces on environmental, social, and governance issues. Today’s assessment of this exhaustive report is more on the social and environmental fronts and reveals the balance Disney has to maintain between running a public company accountable to its shareholders and an organization that works on achieving more for the public good.
With most of its products manufactured by licensees, Disney-branded products have long been produced by far more suppliers than other consumer product companies. Over 24,000 facilities make Disney products, from stationery to mouse ears. As a result, Disney has long operated an International Labor Standards program to address issues related to working conditions in factories that manufacturer Disney-labeled products. Hence, while Disney has a stringent code of conduct for its suppliers, the breadth of facilities spread out from Latin America to the Middle East make it difficult for Disney to monitor violations related to health, safety, and wages. To that end, Disney has joined ethical supply chain organizations like The Global Social Compliance Program (GSCP) and SEDEX. Despite Disney’s commitment to enforce its Code of Conduct, the results are mixed: the various supplier assessments related to issues like compensation, safety, and environmental protection have, depending on the metrics measured, ticked upwards, slightly decreased, or flatlined. Nevertheless, Disney has made more progress integrating labor standards within its overall business operations.
Disney has also made strides on the environmental front. Most of the company’s emissions are from the operations of its theme parks, cruises, and resorts. The company has set targets on a reduction of greenhouse gas emissions and electricity consumption while pursing more renewable energy sources. Disney has achieved incremental annual reductions since establishing its goals in 2006–which it expects to ramp up from a combination of energy efficiency programs and carbon offsets. To that end, in 2009 Disney invested at least US$15.5 million in offset programs globally. The company also made improvements in waste diversion and will accelerate its water conservation plans by 2012.
Disney’s CSR report is worthy of coverage in a series, not just one article, since it is easy to get lost in the myriad of details that the company discusses on additional topics from nature conservation to community giving. For dedicated CSR practitioners, any criticism of Disney’s CSR report may not emanate from what the company does or does not do, but what the company leaves out, which is visible upon examining the Global Reporting Initiative (the CSR reporting standard Disney uses) index.
CSR advocates and bean counters may raise their eyebrows of some details Disney omits–sometimes with an explanation, sometimes without. Upon reading Disney’s latest SEC annual report, however, critics and investors will have a greater understanding of just how complex Disney’s business model is–and overall, this CSR report is a detailed, deliberative, and a model case study that demonstrates the challenges companies face in disclosing their impacts on people, the planet, and civil society. For advocates of integrated reporting like the GRI, Disney’s report also demonstrates the difficulty articulating the business case for “one report.” Intertwining financial and sustainability reporting would be a huge mountain to climb for any organization, even a talent magnet like Disney.