Netflix operates in a capital-intensive environment where efficient allocation of shareholder resources is paramount. However, there are reasons to be concerned that capital is being deployed toward ESG initiatives without demonstrated adherence to the financial return metrics required of other business units.

The 2024 ESG Report demonstrates that management understands the mechanism of financial efficiency.1 The Company explicitly notes its strategy of identifying” the efficiency improvements with the highest return on investment for energy used in our offices and studios.” This acknowledges that ROI analysis is both feasible and appropriate for ESG-related expenditures. However, significant gaps remain, as this rigorous financial lens appears to be applied selectively or restrictively, leaving shareholders unassured that the Company’s broader ESG portfolio is fully informed by financial opportunity costs.

Examples where capital allocation may be decoupled from financial return include:



1. Sustainable Aviation Buyers Alliance (SABA): The Company is a co-founder of SABA, participating in a collective commitment of nearly $200 million to purchase Sustainable Aviation Fuel (SAF) certificates. The Report states the goal is to “send market signals” to producers, but subsidizing a nascent market to send signals sounds like an economic policy action not a corporate investment strategy. There is apparently no evidence this premium expenditure was authorized based on an NPV calculation justifying the cost against standard procurement.



2. Fund for Creative Equity: This initiative represents a $100 million commitment, with approximately $57 million invested by the end of 2024. Success is reported strictly through non-financial metrics, such as “25k+ people supported” but shareholders have apparently been provided no data demonstrating that this $100 million outflow meets an internal hurdle rate or generates a measurable financial return through recruitment savings or accretive content revenue.



3. Operational Efficiency Investments: While the Company references “return on investment,” it qualifies this metric as applying to “energy used.” This phrasing suggests a siloed capital bucket where energy projects compete only against other energy projects, rather than competing for capital against high-yield core business opportunities. If these investments do not meet the enterprise-wide cost of capital, they may represent a destruction of shareholder value despite being “efficient” relative to other energy options.



4. “Matching” Emissions via Carbon Credits: The Company purchases and retires millions of tons of carbon credits annually to “match” emissions. Unlike an investment that generates cash flow, this is a recurring expense that purchases an asset immediately retired for zero financial gain. Based on the report, shareholders are left unaware if management has calculated the compound opportunity cost of these funds had they been invested in profitable operations rather than retired assets.

We urge a vote FOR this proposal.


1 https://s22.q4cdn.com/959853165/files/doc_downloads/2025/6/2024-Netflix-Environmental-Social-Governance-Report.pdf