Hollywood Courts Wall Street’s ESG Investors Mainly With Film and TV Messages, Not Carbon Offsets

Alex Weprin
·8 min read

This story is part of The Hollywood Reporter’s 2023 Sustainability Issue (click here to read more).

On Spaceship Earth, the famous ride at Walt Disney World’s Epcot Center (it’s the one housed inside the park’s signature geodesic sphere), visitors are transported through humanity’s great achievements, culminating with a projection of the Earth in the vast expanse of space.

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Just a half-mile to the west of that sphere, in an open field between Epcot Center Drive and World Drive, sits one of Disney’s most visible efforts to protect the Earth: an enormous, 22-acre array of solar panels, providing electricity to Disney World. Viewing the array from above (or via Google Maps), one can see that it has the unmistakable shape of Mickey Mouse ears.

Disney World’s turn to renewable energy is part of a growing trend among large companies as investors seek out companies that are stewards of the environment — or that are at least willing to tout their eco-credentials.

It’s a big business, with billions of dollars from investors pouring in annually (to the tune of $157.3 billion in 2022, according to Morningstar). And every major public company in entertainment wants a piece of that pot.

And so, Disney, and competitors like Comcast, are building solar arrays to help power their theme parks and offices, while other companies pursue their own eco-friendly efforts.

At Fox Corp., the company touts in its latest Corporate Social Responsibility Report that Fox News field crews “utilize solar-powered generators for daily and breaking news coverage,” and that it is expanding its waste management initiatives on the Fox Studio Lot in Los Angeles.

The company partnered with One Tree Planted to plant new trees across the country, while employees at Fox Sports created what they call the “Fox Sports Carbon Council.” “This group meets monthly and consists of dedicated employees with an interest in sustainability,” the company says in its report. “The purpose of the Council is to share ideas and introduce environmental solutions.”

At NBCUniversal owner Comcast, the company’s 2022 Impact Report detailed plans to recycle fiber-optic cables, and to use recycled packaging for routers.

Disney said in its own 2022 Corporate Social Responsibility Report that it is hoping to reduce its use of paper, palm oil and plastics in its consumer products. It touts the care that the animals that live at its Animal Kingdom theme park receive, and the $120 million and counting that the Disney Conservation Fund has doled out to worthy causes.

And at Netflix, the company is seeking to replace diesel generators for productions with rechargeable batteries.

But the environmental efforts also underscore a subtle but significant fact: Most media and entertainment companies aren’t really major carbon emitters anyway. Other industries with heavy physical footprints or exposure to mining or oil make up the vast majority of ESG (environmental, social and governance) concerns.

“Because of increased investor focus on ESG, increasingly companies have shared their climate-related data,” Cowen analyst Doug Creutz noted in a December report. For media companies in his coverage universe that reported carbon emissions, “total net emissions in 2021 were 40 million tons of CO2, or around 0.1 percent of the global total across all industries,” he found. “Sony, Comcast and Disney accounted for about 70 percent of this total, which is not surprising given their specific industry exposures and overall size. For the companies that have not reported emissions (including Lionsgate and AMC Networks), we believe the total incremental net emissions are not more than 5 million, given reported emissions by peers. In general, our companies are largely devoted to the production of digital goods, which does not impose a significant emissions footprint relative to the size of their businesses.”

Cowen’s chart of greenhouse gas (GHG) emissions scores, which assess a company’s performance in managing its carbon footprint, ranges from 71 for Comcast, 69 for Sony, 68 for Paramount, 65 for Lionsgate and 55 for Fox to 47 for Disney and 38 for Warner Bros. Discovery. Meanwhile, in air quality — which measures atmospheric pollutants released — Disney (58) and WBD (50) were ahead of peers Comcast (45), Paramount (38) and Sony (35).

It is a fact even acknowledged by Paramount in its 2022 ESG report.

“As a global media company, we are not a major emitter of GHG and we do not consider climate change to be a discretely material issue for our company,” Paramount wrote. “However, we cannot separate ourselves from the growing need for collective action. The impacts of climate change — from worsening storms, wildfires, and droughts to biodiversity loss and sea level rise — will profoundly affect the ways we live and how we must adapt in the future.”

(Among the projects Paramount cited in its report was “waste diversion at RuPaul’s Drag Race,” with sets and props being recycled or re-used.)

In fact, for these companies, actually offsetting their carbon emissions is somewhat trivial.

What would happen if companies chose or were forced to pay to offset all their emissions? “For the most part, our media companies would only take a low to mid single-digit percentage hit to EBITDA if they were forced to fully offset current carbon emissions at the current market price for offsets,” Creutz concluded.

But the relative lack of actual emissions raises another issue: With so much cash being poured into companies that do good for the environment, how is a company with a small carbon footprint supposed to compete?

The answer for entertainment companies is obvious: their content.

Netflix, for example, has an initiative to feature electric vehicles in all of its films and TV series. Earlier this year it announced a partnership with General Motors that will bring that automaker’s cars to Netflix shows.

“Starting in 2022 we committed to including at least one EV in every Netflix produced film and series and this is really part of our broader efforts in the sustainability space,” Netflix CMO Marian Lee told reporters at a virtual press conference last month. “And we do that through a commitment to more sustainable storytelling, which comes to life in two ways, both on screen and behind the camera.”

So for the next Netflix rom-com, don’t be surprised if the protagonist arrives to the wedding in a Bolt.

“We really focus first on educating all of the talent that we work with, so that they can then incorporate the EVs into their storylines in a really organic way, so it doesn’t feel out of place,” Lee adds.

But that’s not all. Netflix says it is trying to incorporate positive messages related to sustainability in its programming.

“The breakout success of Don’t Look Up confirmed our analysis from last year’s report: hundreds of millions of households choose to watch titles that shine a light on sustainability,” the company wrote in its latest ESG report. Among the show’s cited are Bo Burnham’s Inside, Ada Twist Scientist and Life in Color With David Attenborough.

But Netflix is far from alone.

“Through National Geographic, Disneynature, and our other content platforms, Disney enjoys a rich and growing library of programming that connects audiences with the wonders of our natural world and inspires action to create a cleaner, safer, and healthier planet,” Disney wrote in its latest report, also calling out ABC News programming.

And Comcast/NBCUniversal used its report to tout “programming with a purpose.”

“In 2021, we leveraged the reach of our programming and personalities to spotlight pressing climate challenges facing our world,” the company wrote. “The goal? Inspiring thoughtful conversation on creating a more sustainable planet.”

NBC News and NBC’s late night shows were cited, as well as a “net zero carbon football game” that aired on Sky.

But the continued focus on ESG also finds itself at something of a crossroads. While billions are still pouring into ESG funds and ETFs, the actual volume of inflows has been on the decline in recent years.

And BlackRock CEO Larry Fink, who has long pushed for companies to embrace their ESG bona fides (BlackRock is the largest owner of ETFs and index funds), seemed to walk back his prior calls in this year’s letter to shareholders March 15.

After stating that adapting to a changing climate should remain a top priority for investors and executives, he explains why he has been so vocal about ESG in his annual letters.

“As minority shareholders, it’s not our place to be telling companies what to do. My letters to CEOs are written with a single goal: to ensure companies are going to generate durable, long-term investment returns for our clients,” Fink writes. “But as I have said consistently over many years now, it is for governments to make policy and enact legislation, and not for companies, including asset managers, to be the environmental police.”

For entertainment companies, the rush to sustainability has proven itself an opportunity to show off that they care, through their content.

Georg Szalai in London contributed to this report.

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