Disney has many businesses, but one of its most successful is in cruise ships. They’re popular and make money. Cruise ships in general are also problematic when it comes to environmental impact, as they are not fuel-efficient and create pollution in the air and water. How much? The Environmental Protection Agency in 2008 estimated that a single cruise ship, each day, produced the following pollution, according to The Daily Green:
“21,000 gallons of sewage
One ton of garbage
170,000 gallons of wastewater from sinks, showers and laundry
More than 25 pounds of batteries, fluorescent lights, medical wastes and expired chemicals
Up to 6,400 gallons of oily bilge water from engines”
Cruise ships haven’t lost favor with consumers, they won’t be outlawed, and they won’t voluntarily quit. But they can improve their environmental footprint and efficiency. One company that’s done this is Disney, which scored highest in a report card from Friends of the Earth last year for its efforts in sewage treatment, water quality, cuts in air emissions and improvement from two years prior.
How did this happen? Some insight into that was provided Monday at the Milken Institute Global Conference in Beverly Hills, Calif., in a panel session that included Disney Chief Financial Officer Jay Rasulo.
Employees care what the company does: The new “counterparty risks” are focused on the supply chain, that companies are being responsible around the world, and this is something that employees are passionate about, Rasulo said. Employees will not only react to, say, a fire in Bangladesh, but their neighbors will, too, asking them about working for a company that lets something like that happen.
Make the argument for CSR from the CFO’s perspective: Companies can find it quite difficult to know how to weigh environmental and other social-impact issues, particularly in relation to financial considerations, Rasulo said. As a public company, Disney must also work in the best interests of its shareholders, so, “if you want to cut out certain activities, whether it’s environmental activities, whether it’s labor activities around the world … if you want to cut these out of your value chain, it can have a very big financial impact in the short run on your company,” Rasulo said. When these decisions rest with the CFO, however, all these questions are asked in one place.
Align strategy with messaging: At Disney, CSR is part of the CFO’s duties because “to be successful, ultimately successful financially and strategically, you really have to have a match between the authentic nature of your of message that is delivered” through products, the workforce and the CEO. And, because of the trust suppliers and customers place in Disney, anything that threatens that, such as problems in the supply chain, becomes not just a social concern but a core financial and strategic concern, Rasulo said.
Company structure can overcome the conflict between the bottom line and doing right: As mentioned, cruise ships are big business at Disney. The business “scores off the scale on value and entertainment.” But these type of ships have a tremendous carbon footprint, whether emissions or otherwise. “We wanted to expand this business, but there is yet to be discovered the technology that will yield a cleaner experience, a cleaner footprint for the business.” Rather than isolate this problem, or ignore it, Disney made the issue a companywide problem to solve. The company makes all business units assess environmental impacts in any capital requests — essentially, Rasulo said, an internally imposed carbon tax — “and one of the costs that they’ve got to consider … is the cost of us, today, buying carbon offsets to the footprint they create.”
Such managers don’t want to be taxed, even internally, Rasulo said, and so this policy spurs them to innovate around the problem where they might not have otherwise. “The goal is to really innovate and to change the business model such that you don’t have to worry about [carbon issues].”