In the midst of the ongoing public backlash against the company’s recent foray into political activism, prominent anti-ESG Disney investor Vivek Ramaswamy has made a personal plea to the House of Mouse for them to refrain from stepping further into this arena – otherwise, he warns, they “will be expected to take sides that won’t be favorable to its business”.
The founder of biopharmaceutical company Roivant Sciences and the author of Woke, Inc.: Inside corporate America’s Social Justice Scam, Ramaswamy – if it wasn’t already apparent by the title of his book – has been a fervent critic of corporate America’s recent obsession with following Environmental, Social, and Governance (ESG) principles – which, in short, essentially serve as rubrics against which companies can rank their commitments to such goals as promoting diversity, fighting climate change, performing social outreach, and the like.
On September 19th, speaking as representative of his recently co-founded Strive Asset Management and those investors who through his firm have some level of stake in the entertainment company, Ramaswamy issued a formal letter to Disney CEO Bob Chapek asking him to take corrective action in the face of “an unprecedented [public approval ratings] collapse following the company’s public embrace of controversial political positions in deference to social activists.”
Citing such events as the company’s battle with Florida governor Ron DeSantis over the state’s newly-passed Parental Rights in Education Law, their firing of Gina Carano, and their various attempts to weigh in on anti-abortion legislation, Ramaswamy would lament “There is no evidence to suggest that these positions have benefited Disney’s stockholders, and a growing body of evidence to suggest that they have harmed Disney’s stockholders.”
“To the contrary, just last week, you praised Disney for “[standing] our ground,” he asserted. “We find these comments deeply troubling for Disney’s future.”
To this end, Ramaswamy then took a moment to “remind Disney’s board it owes a fiduciary duty solely to Disney’s actual owners, not to a minority of its employees, activist organizations, or to large financial institutions who promote one-sided political agendas.”
“In 2022, the three largest passive asset managers in the world – BlackRock, State Street, and Vanguard – were Disney’s top 3 shareholder,” he detailed. “By contrast, the actual owners of Disney are not BlackRock, State Street, Vanguard – or, for that matter, Strive. Disney’s actual owners are the clients of these institutions: everyday citizens whose capital is invested in passively managed index funds.”
“You owe a fiduciary duty to the actual owners of Disney, not to the institutions who claim to represent them,” the investor declared. “There is strong reason to believe that these large asset managers are not acting with their clients’ best interests in mind.”
“Like Disney’s customers and Americans more generally, Disney’s shareholders are not monolithically progressive,” he continued. “Thus even if these investors wanted their capital to be used for political purposes – and most do not – not all of them would agree with the positions Disney chose to adopt.”
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With all of this said, Ramaswamy called on Disney to “focus on delivering an excellent customer experience without repeating the mistakes of its recent past” and “make clear that it will no longer take political stances on issues unrelated to its core business operations.“
“The company must make clear that it will hold firm to this promise, and that it will not waver no matter how important a particular social cause is to Disney’s employees or its followers on Twitter,” he said. “While we defer to management on the best way to achieve this goal, our view is that such change will only be possible if Disney formally updates its corporate policy to adopt a position of neutrality ex ante. Such corporate policy would appropriately immunize Disney from criticism either from its liberal constituents or its conservative ones.”
“Disney must act now,” the entrepreneur asserted. “If Disney continues speaking out on political issues that do not affect its business, it will face even greater pressure to act when they do. And the sides Disney will be expected to take won’t be the ones that are favorable to its business.”
Ultimately, Ramaswamy issued three requests “on behalf of [Strive’s] clients”, which included:
- The adoption “of a formal corporate policy that Disney does not take public positions on political controversies that are unrelated to the company’s core business operations”,
- A public commitment to “to political nondiscrimination amongst its employees and customers, including human resources policies which make clear that employees or customers will not be subject to punishment for expressing political views,”
- And a commitment to “making all decisions based on long-term profitability of Disney alone, without regard to social, cultural, or political pressure from employees, activist groups, or other stakeholders.”
Asked for comment in response to Ramaswamy’s message, a Disney spokesperson told The Wall Street Journal that “We listen to [the shareholders’] perspectives.”