Disney tried to kill him, but the Securities and Exchange Commission wouldn’t let them.

The National Legal and Policy Center (NLPC), a shareholder of Disney, presented a resolution to the Walt Disney

The company’s annual meeting of shareholders on Wednesday March 9 requesting an annual report on the company’s efforts to determine the protection of human rights in foreign countries, namely China.

The resolution was put to a proxy vote, which Disney’s board of directors rejected, citing the shareholder seeking to micromanage the company.

The SEC disagreed and told Disney on Jan. 19 that NLPC had the right to submit the proxy vote to company shareholders.

Although the resolution was ultimately defeated, 34% of shareholders voted in favor of Disney producing evidence that it did not source materials from US-sanctioned companies or US-sanctioned regions. United States for human rights violations.

At the shareholder meeting, NPLC noted that Disney supports documents such as the “United Nations Universal Declaration of Human Rights,” but wondered what they were doing about it as business. And why China was getting a pass.

China’s human rights problem for businesses starts with Xinjiang’s supply chains.

Numerous companies have been sanctioned in the far eastern province of Xinjiang over allegations of forced labor believed to be true by the US Department of Homeland Security. Xinjiang is home to hundreds of thousands of Uighurs and other Muslim minorities imprisoned under China’s version of the war on terror. For Beijing, Uyghur Muslim detention centers are re-education centers. Prison labor is common.

Last year, Customs and Border Protection banned Xinjiang cotton from US supply chains. This means that all garments made from cotton from Xinjiang would be held in port containers until a company can prove that its product was not made by forced labor.

NLPC was asking Disney to do due diligence on its supply chains in China and share it with investors. But the board of directors did not want to go further on this issue and brought its main shareholders with them to vote against the resolution.

Disney’s major shareholders are Blackrock, Vanguard and State Street Bank. These three people tend to vote in favor of a board’s decision and are not considered shareholder activists. Blackrock is a big proponent of environmental, social and governance, or ESG, investing, but it’s unclear whether he’s dominating corporate boards to push them down this path. ESG is an issue Blackrock is regularly harassed about in relation to China.

For NLPC, not sourcing materials made from forced labor is as ESG as it gets.

Disney was asked to comment on Thursday’s vote result in an email to its corporate press and a phone call. The company had until noon Friday to comment.

China’s influence on American companies

Disney isn’t the only company silent on China, America’s biggest strategic rival since the fall of the Soviet Union.

Whether it’s Taiwan, Hong Kong or Xinjiang, China sees these as national issues. Foreigners don’t have to meddle in the affairs of their homes, the ruling Communist Party (CCP) has said.

Although China does not storm Taiwan’s beaches with tanks and drop bombs from fighter jets, Russia also views Ukraine as an internal affair. This did not prevent Disney from suspending all activities in Russia, nor Goldman Sachs from closing its offices in Moscow in less than 10 days after the start of the fighting in Ukraine.

It’s hard to imagine they would do the same if China tried to finally turn Taiwan into a CCP island. Even if the threat of greater penalties existed, companies would be much slower to act, if at all.

When the Trump administration slapped tariffs on more than $300 billion in imports from China, companies mostly stayed put, regardless of the real threats that Washington would make it harder to make deals. business there.

China has a leverage effect on American companies.

In 2019, Houston Rockets general manager Daryl Morey tweeted “Fight for freedom; support Hong Kong. The Rockets were instantly banned from Chinese television.

Shortly after, CCTV, China’s largest public broadcaster, banned NBA games in mainland China. The Golden State Warriors, then China’s number one team jersey seller, remained silent on the matter. That’s why it was so easy for the team’s minority owner and Silicon Valley star, Chamath Palipahitiya, to say “nobody cares about Uyghurs” in a podcast earlier this year. Some might erupt in a moral panic over it in the United States, but it doesn’t hurt the Warriors, or the NBA, in one of their most important markets.

Disney doesn’t want to be banned from China for saying it won’t source cotton from Xinjiang.

In 1997, Buena Vista Pictures (renamed Walt Disney Studios) distributed the Dalai Lama Kundun film. China hated it and banned it. Disney said they would and would release it anyway. Then the CCP told them that they were not welcome in China. Then-CEO Michael Eisner bent over backwards to ensure Disney still had access to Disney fans in mainland China.

Their recently opened Shanghai Disneyland resort is partnered with a state-owned company that owns a majority stake in the first-ever Disney park in mainland China.

Pretending that Xinjiang is just a Chinese province and that what the State Departments under the Trump and Biden administrations have declared “genocide” is just an internal China problem will be harder to ignore.

On Thursday, more than $27 million in additional funding in the FY2022 Omnibus Appropriations Bill was granted to help implement the Uyghur Forced Labor Prevention Law (UFLPA). The UFLPA was signed into law by President Biden on December 23, 2021.

“The Chinese government and companies have for too long profited from the forced labor of Uyghurs, Kazakhs and other Turkish Muslim ethnic minorities. Given the close connection between forced labor, crimes against humanity and genocide in the Xinjiang Uyghur Autonomous Region, we must impose real costs on anyone who benefits from atrocities. As the United States increases its vigilance to protect our markets from complicity in these atrocities, other countries around the world must do the same. — Sen. Jeff Merkley (D-OR) and Rep. James P. McGovern (D-MA), co-chairs of the bipartisan, bicameral Congressional Executive Commission on China, March 10, 2022.

Paul Chesser, director of NLPC’s Corporate Integrity Project, addressed shareholders on March 9.

“Forced labor and human rights are a concern for the right and the left,” he said in a telephone interview on Thursday. “You still have to break through the prospect of corporate establishment and it will take them some time to wake up. They woke up sharply and quickly with Russia and Ukraine. Would they react the same way if China was invading Taiwan? They’re going to look really bad if they don’t take a similar approach to what they took with Russia,” he said. “It’s a nothing burger to shut down in Russia. Close in China is another story.

More than 100 US and European companies have said they are leaving Russia permanently or closing temporarily, resulting in the layoff of thousands of workers. The hope is that these newly fired Russians will pressure Vladimir Putin and the Russian military to end the war in Ukraine.

Precisely no company has left China, or even threatened to do so, because of the “genocide” in Xinjiang.

In fact, Airbnb, which is no longer listed in Russia, has listings in the city of Kashgar in Xinjiang province. The historic Uyghur part of the city is being razed and rebuilt by the Chinese government, according to the Uyghur Human Rights Project in Washington. The group wrote in a 2020 report that the rebuilding of the Old City aimed to erase remnants of designs and traditions that were not part of Han Chinese culture.

The war between Russia and the Chinese genocide offers interesting comparisons.

If China were pressured like Russia with economy-destroying sanctions, Beijing could easily retaliate by sending Disney, Apple and Nike packing their bags. If so, the Chinese government would have allies in Washington harassing members of Congress to reverse the trend. They wouldn’t need to hire a lobbying firm.

For US companies and Washington, China’s balancing act is what Canadian writer Margaret Atwood would describe as “a tightrope walk over Niagara Falls.”

Activist Disney shareholders failed to convince the company to report on its China supply chain this week. That just over a third have asked them to do so suggests there is some momentum here. Chamath is wrong. People care about forced labor and human rights.

The NLPC is also considering a proposal as a shareholder of GM to examine child labor and forced labor in rare earth and cobalt mines in Africa.

“Disney is a multi-billion dollar company,” Chesser said. “If they don’t want shareholders asking them about their supply chains in China, they should just go private.”

It won’t work.

Companies will have to answer for their supply chains from Xinjiang, especially imported garments, due to Uyghur forced labor law. How this is applied is a question. But as of this week, Washington is giving Customs and Border Protection more money to stop imports of sanctioned products from Xinjiang. It’s a decision that garners bipartisan support from voters, politicians and Disney fanatics.