Disney - Upheaval Continues (and this isn't Counterculture 2.0)

 "... Florida Republican Gov. Ron DeSantis attacked the company [Disney], saying it 'crossed the line' with its criticism [of 'Don't Say Gay’ legislative bill] ... if the past repeats itself, the bark will likely be worse than the bite." - Hannah Sampson, Yahoo, April 18, 2022. 

And things haven't calmed down since. 

THE “LINE” KEEPS CHANGING

But what had been that “line?” That’s the profound challenge business is encountering in navigating ESG.

The raw reality is that the line keeps changing. While that is in play so are careers. Disney announced late this week, reports Deadline, that the Chief Corporate Affairs Officer Geoff Morrell has stepped down from that position for personal reasons. Morell had been in that job less that four months. During those four months Disney has gone into upheaval and it remains reeling.

Initially progressives were the front lines pushing for ESG (Environmental Social Governance) values. Then onto the playing field ran conservatives - as well as shareholders and many more.

IN THE MOMENT …

Currently, the leadership at not only Disney but also Coca-Cola, Starbucks and a growing list of public corporations is coming undone in what might be described as "anguished confusion." What public stances should leaders take? What constitutes the line or line which shouldn't be crossed? So much of the interpretation of that depends on where power is most intense in that particular moment in time. 

The risk involves agitating, alienating, and/or generating organized opposition from myriad constituencies. They include government officials, the media, communities, employees, business partners, investors, universities, and recruits for jobs. 

IN-HOUSE LEGAL

Meanwhile, their in-house legal departments are also caught in the turmoil. Research by the Rock Center for Corporate Governance at Stanford University documented that the political and social positions taken by the chief executive officers are a major concern for the chief legal officer. Here is the analysis I published in O'Dwyer's Public Relations about that development. 

DECODING

Last January there had been a decoding of these forces in an article published in Corporate Counsel. That had been by law firm Paul Weiss.

Essentially the takeaway is: In-house legal has to create new mindsets and tools for identifying what constitutes the new lines being drawn. 

APPROACHING AND DOING LAW VERY DIFFERENTLY

Paul Weiss Chairperson Brad Karp and the law firm's Chief Sustainability-ESG Officer David Curran provided a 4-point guide for how in-house legal can get a handle on and actually manage the continually mutating issues. The 4 are:

Reinvent Playbooks. The conventional ways are no longer adequate. That is primarily because ESG issues spill over to multiple corporate departments and lines of business. 

They recommend:

"Legal teams must be involved with HR, investor relations, finance, and business units to encounter ESG issues. Lawyers are in an ideal position to coordinate disparate parts of an organization and fill important gaps."

Make Sure Department Members Understand the Unique Aspects of ESG. Because there are so many gray areas in ESG, traditional methods of conducting legal business have become anachronistic. Those old approaches, of course, are: researching precedent and applying law. What is needed is the ability to have an interdisciplinary mindset and experience leveraging that. Among other competences in-house lawyers need, hammer Karp and Curran are to:

" ... make sure public disclosures align with ESG goals, structure board committees to oversee ESG risks and opportunities, and develop systems for monitoring and measuring ESG progress."

Validate ESG Data. So much depends on that, ranging from conformance to ESG metrics to the criteria required for Sustainable Investments. The growth of that investment niche depends on how that data is configured.

 Karp and Curran posit: "Lawyers can pressure test their data using many of the same models and compliance frameworks developed to ensure that companies are in compliance with anti-corruption laws."

Be Aware of ESG Risks in Mergers and Acquisitions and IPOs. Much of ESG is still new to lawyers. Therefore, it is all too easy for them to "not look" where the risks can be to corporations in this new era of ESG values. They could miss what might not have been a red flag in pre-ESG times. Essentially, so much has changed. 

They warn:

"All it takes is one weak link in a supply-chain agreement or a board member's past bad behavior - to break the chain and put the company's reputation at risk."

CONVERSATION ISN’T ABOUT “ANOTHER COUNTERCULTURE”

So much of this comes down to talk. ESG is evolving into so many aberrant forms. No longer does the analogy of "Another Counterculture" apply. That has become downright misleading.

The language thought leaders use about ESG has to also change.

With a shift in language, soon enough will emerge the recognition that we may not know what we are dealing with in the moment. So, there will have to be fresh paradigms.

Over the years Jane Genova has covered major corporations. Now and then she does freelance communications assignments for Paul Weiss and a number of other law firms, both defense and plaintiff.