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Corporate heroes and zeros: McDonald’s leaves Russia & Disney angers Florida

Corporate activism on the rise as almost 1,000 companies exit Russia while Disney fumbles LGBTQ allyship and angers Florida

Corporate activism ukraine
Illustrations by Benoit Tarfif

Apart from arms dealers, it’s hard to think of corporations with a less sensitive moral and social compass than the world’s commodity traders. By quietly buying and selling hard-to-trace metals, oil, grains and chemicals, companies like Cargill, Glencore and Trafigura have been accused of propping up some of the world’s most odious regimes.

So it’s worth noting – and applauding – the decision in early April by Geneva-based Vitol, the world’s number-one independent oil trader, to stop handling Russian oil products by the end of 2022. Researchers at Yale University have counted almost 1,000 companies like Vitol that have voluntarily curtailed or halted dealings with Russia in protest against the invasion of Ukraine.

Some pulled out earlier than others. Vitol’s move was revealed more than a month after the invasion began. For most of the companies – which include such household names as American Express, Apple and Uber – the pain of withdrawal is minimal. Russia’s economy has shrunk to the point where, measured in U.S. dollars, it is not much bigger than many states’. And most Russians outside the main cities are still too poor to afford Western brands.

Even so, some companies have made substantial sacrifices. The London-based oil giant BP has incurred charges as high as US$25 billion by abandoning its 19.75% stake in Rosneft, the Russian energy group. PepsiCo took a write-down of almost US$500 million on its Russian drinks and snacks business.

Putin threatened to auction off shares in any foreign company that refuses to resume operations, in what it calls “the first step toward nationalization.” In McDonald’s case, the burger giant sold its stores to a Siberian businessman, Alexander Govor, in May, who says he paid “far lower than market price.” Govor quickly rebranded the chain under the name Vkusno & tochka and reopened over a dozen locations in June. McDonald’s said it wrote down up to $1.4bn to cover the exit.

Two of the Yale researchers, Jeffrey Sonnenfeld and Steven Tian, wrote in The New York Times that “while it’s impossible to say whether all of these companies are motivated by purely moral concerns, they’ve all gone above and beyond what is legally required by international sanctions.

“We realize that some companies already do business with many other repressive and murderous regimes around the world. But now there’s a chance to draw a line with one country, over one unprovoked war of aggression, and make a difference.”

Acting alone, even corporate giants like BP and Vitol have little hope of hurting Putin, and it’s unlikely that their actions have slowed the invasion. But by joining forces, they have helped isolate his regime and put principle above profit.

 

Zero: Walt Disney Company

Corporate activism disney

Some companies limply refuse to take sides on the hot political issues of the day. Others bravely speak up. Walt Disney has recently tried to have it both ways but has ended up angering almost everyone.

The first signs of trouble at the entertainment giant emerged in March when word leaked out that executives at Pixar Animation Studios, a Disney unit, were censoring scenes in movies showing “overtly gay affection.” Pixar employees walked off their jobs to protest a decision to cut a same-sex kiss from a movie about Buzz Lightyear, a fictional character from the Toy Story movies. The Pixar bosses quickly backtracked.

Meanwhile, Disney was trying to keep its distance from a growing uproar over Florida’s Parental Rights in Education bill, which forbids instruction on sexual orientation and gender identity for young students and limits it for older ones.

The law, dubbed the Don’t Say Gay bill, is the brainchild of Florida’s governor, Ron DeSantis, who is using cultural wedge issues in an apparent bid to promote his as-yet-unannounced ambition to seek the Republican presidential nomination in 2024.

Disney has a vast presence in Florida and is the state’s largest private-sector employer. Its CEO, Bob Chapek, initially responded to the Don’t Say Gay bill by asserting that he didn’t want the company to become “a political football.” But, once again, a chorus of protest from employees, the LGBTQ community and other critics persuaded him to change his mind. Within days, Chapek had done a U-turn, acknowledging, “You needed me to be a stronger ally in the fight for equal rights and I let you down. I am sorry.” Disney suspended political donations in Florida and pledged to step up its fight against similar legislation in other parts of the country.

If it thought that was the end of its problems, it was wrong. DeSantis promptly accused Disney of hypocrisy for raking in money from family entertainment but then opposing a law designed, in his view, to protect parents’ rights.

The state’s Republican-controlled legislature has rushed through a law that stripped Disney of a special tax status under which it was able to run a vast area around the Magic Kingdom almost as it wished without interference from local municipalities.

Disney executives have no doubt learned a hard lesson: trying to please everyone is typically not a winning strategy.

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