Mentions of social-impact initiatives during earnings calls have declined, reversing a trend that had picked up after the killing of George Floyd in 2020
By Mark Maurer of The WSJ. Excerpts:
"Companies’ mentions of green and social initiatives during earnings calls have fallen off sharply in recent quarters, reversing a more boastful approach taken over the past few years amid intensifying pressure from some investors and conservative activists."
"Finance chiefs and other executives have significantly quieted down in public settings about their environmental and employee diversity efforts as opposition has mounted from a confluence of interests: investors who want companies to focus on their operations, not the social good, and conservative groups and political leaders who have seized on corporate support of such causes to rally “anti-woke” constituents—for example, calling for boycotts of brands that advertise their support of the LGBT community in the wake of recent disputes with Target and Bud Light.
“The easiest thing to do is just to stay out of the conversation and emphasize other facets of business that are going to be perceived as less controversial and more core to the traditional metrics of the business,” said Jason Jay, senior lecturer of sustainability at Massachusetts Institute of Technology.
"Executives at U.S.-listed companies mentioned “environmental, social and governance,” “ESG,” “diversity, equity and inclusion,” “DEI” or “sustainability” on 575 earnings calls from April 1 to June 5, down 31% from the same period last year"
"That is the largest such year-over-year decline and the fifth consecutive quarter of year-over-year drops"
"While such instances of “green-hushing” may be part of a larger strategy for many companies to avoid weighing in on divisive issues, there is little sign that public companies are pulling back from the initiatives themselves"
"Companies still regularly voluntarily issue detailed sustainability reports, disclose greenhouse-gas emissions and tie a portion of their executive compensation to ESG metrics."
"70% of U.S. chief executives said that their company’s ESG programs improve their financial performance, up from 37% a year earlier"
"The National Center for Public Policy Research, a conservative think tank . . . argued that the companies might be abandoning their fiduciary duties to shareholders by not being neutral on social and political issues or acting in accordance with discrimination laws, said Scott Shepard, a fellow at the think tank."
"Some of the ESG silence on earnings calls could be attributable to corporate efforts to avoid “greenwashing,” or touting overly optimistic projections for sustainability, said Rob Fisher, KPMG’s U.S. ESG leader. By being more careful about what they put out in the public domain, he said, companies can avoid running afoul of new and proposed sustainability reporting requirements."
Related posts:
‘Green’ Funds Cost Three Times More Than You Think (2023)
An Inconvenient Truth About ESG Investing (2022)
ESG Investing Can Do Good or Do Well, but Don’t Expect Both (2022)
The hidden costs of corporate social responsibility (2021)
Why the Sustainable Investment Craze Is Flawed (2020)
C.E.O.s Are Qualified to Make Profits, Not Lead Society (2020)
ESG Investing in the Pandemic Shows Power of Luck (2020)
ESG Investing Shines in Market Turmoil, With Help From Big Tech: The strength of socially responsible funds suggests they have staying power; ‘ESG is not a fad’ (2020)
Funds that market themselves as sustainable investments aren’t necessarily focused on companies that fight climate change, develop wind turbines or promote diverse boards (2020)
ESG Funds Draw SEC Scrutiny (companies that pursue strategies to address environmental, social or governance challenges) (2019)
Is it a retailer’s job to keep shoppers from their vices? (or Adam Smith vs. CVS pharmacy) (2017)
Can You Find Virtue by Investing in Vice? (2006)
What if companies pledge to adhere to social and environmental accountability guidelines? (2015)
Conspicuous Consumption, Conspicuous Virtue, Thorstein Veblen (and Adam Smith, too!) (2007)
Data show that socially responsible investments can outperform the S&P 500 index (2017)
Is altruism a result of selfishness? (2017)
Do you have to be selfish to make more money? (2018)
Does collective self-deception mask selfish behavior? (2018)
Why Doing Good Makes It Easier to Be Bad (2019)
Businesses intentionally display their social and environmental performance in addition to their financial performance to stakeholders (2019)
Should you invest according to religious guidelines? (2017)
Companies Adapt to Activism by Athletes (2021)
For a humorous view of this issue see
A Snickers a Day Keeps the Doctor Away: Why does CVS want to make my migraine cures hard to find? by Joseph C. Sternberg of the WSJ (2017)
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