Winter’s a good time to stay in and cuddle, but put me in summer and I’ll be a – happy snowman! Olav (Frozen)
Written by Princesses Iciar & Loes
While Olav can’t wait for the sun to burn on his face, shareholders of The Walt Disney Group should pray their board of directors is less naïve. The Walt Disney Group, a diversified worldwide entertainment company with presence in the media, parks and resorts, studio entertainment and consumer products segments, operates fifteen theme parks across the globe. Over 130 million visitors a year travel the globe to dance with Mickey, roar with Simba and sing along with Elsa & Anna. However, climate change beyond the world of Frozen may significantly impact Disney’s business model, putting its $17 bln (30.5% of 2016 group revenues) from theme parks at risk.
Does this mean that the company’s fairy tale is coming to an end? As both customer needs and energy prices will be influenced by climate change, we believe that Disney’s operating cost and demand may be severely impacted. Disney needs to redesign its business model and not be a Dumbo.
Darling it’s better, down where it’s wetter, under the sea
Changes in weather may severely impact the attractiveness of Theme park locations. With temperature on the rise it is not difficult to see Disney Park California as the savanna of the Lion King, or the Hong Kong theme park as the flooded city of Atlantis. The change in weather will increase variability in visitor patterns, which will require Disney to have flexible operations, allowing it to easily scale up in unexpected busy days.
It’s a small world – or is it?
Disney’s theme park business model is centered around tourism, families from all over the world fly across the globe to visit one of the six geographic locations to ride space mountain. It is precisely this centralized business model that puts Disney at risk. Approximately 10% of all Disney’s visitors take long haul flights, just to go to the theme park. If we assume a long-haul flight will result in an average emission of 1.96 tons carbon dioxide per person, this will result in 25 million tons carbon dioxide emission per year, just to get to go through the gate of the theme park.
All you need is faith, trust and a little fairy dust
The theme park itself is does not run on fairy dust either. The company does not provide park specific details, but the total group emissions (excl. movie productions) were reported to be 1.63 million tons in 2014. The massive amounts of energy required to run the business puts Disney at serious risk, as governmental policy increases regulation to reduce carbon emission.
There is a shift in consumer needs, and the environmental savvy tourist is on the rise. Considering the massive energy consumption required to enter and enjoy Disney’s parks, Disney needs to address its carbon footprint to maintain a positive image with its fans.
Disney’s actions
Being aware of the danger climate change poses to its business model, Disney has already started moving towards a more sustainable business model, setting the following objectives to be achieved by the company by 2020:
- Zero Net Greenhouse Gas Emissions: By 2020, reduce net emissions by 50% from 2012 total levels
- Zero Waste: By 2020, achieve 60% waste diverted from landfills and incineration
- Conserve Water Resources: By 2018, maintain potable water consumption at 2013 levels at existing sites. Develop Water Conservation plans for new sites
In the same way, apart from these company level initiatives, the Group has identified the power it has to educate and influence the younger generations through its movies. A clear example of this is one of its latest movie releases, Frozen, which tells a story of a princess that is trying to free her kingdom from what appears to be a never-ending winter. The US Government has even approached the company to explore a potential collaboration that involves the Frozen characters and that addresses the issues that climate change is posing to the Artic.
While these activities address the environmental issues in the short term, they do not address Disney’s business model of International theme parks, flying in families from all over the world. Disney needs to carefully listen to Walt’s advice:
“When we do fantasy, we must not lose reality out of sight” – Walt Disney
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Sources:
https://ditm-twdc-us.storage.googleapis.com/2016-Annual-Report.pdf
https://ditm-twdc-us.storage.googleapis.com/envirogoalsandtargets.pdf
http://www.climatechangenews.com/2015/01/22/state-department-in-disney-talks-on-climate-change-frozen-spin-off/
The title is brilliant and the case is interesting.
hahaha i know. now i just want to watch Disney movies
Love this article! It will actually be really interesting to see if they can actually meet their targets by 2020 and be willing to experiment with sustainable methods of construction or whether they are just interested in being seen as green and will proceed with less costly changes to their theme parks.
Interesting article. I’d love to see how Disney has incentives to change aside from the threat of tightening regulations. Children and parents generally won’t change their decision to go to Disney due to the perception of being or not being environmentally sustainable.
The temperature spikes will certainly have an impact on their business so I can see some benefit in trying to reduce their emissions; however, I believe their total output is minuscule compared to the outputs of other industries (airlines, power generation, cars…etc.).
The option to partner with the Government to use their characters to teach children is something that I find interesting. I wonder to what extent other industries could do similar things.
Hilarious! I liked the idea that Walt Disney has the influence over kids and capability to educate them on environmentally sensitive topics through their movies. This could be very powerful in the long term to bring up a generation of environmentally conscientious people.