Mentions of “ESG” (environmental, social, and governance) on earnings conference calls of S&P 500 companies are plummeting, suggesting that firms are reacting to the ongoing backlash from stockholders who don’t want left-wing ideology cutting into their profits.
Analysis of earnings conference call transcripts of S&P 500 companies performed by FactSet reveal a severe downward trend in ESP mentions, the company’s website reports:
“Since peaking at 156 in Q4 2021, the number of S&P 500 companies citing “ESG” on earnings calls has declined (quarter-over-quarter) in four of the past five quarters.
“Compared to Q4 2022, the number of S&P 500 companies citing “ESG” on earnings for Q1 2023 decreased by 23%.”
Eight of the 11 business sectors studied recorded a decrease in the number of companies citing “ESG” on earnings calls, led by the Industrials and Information Technology sectors, FactSet notes.
The steep decline continued into last quarter, according to updated data provided to Axios, the publication reported on August 10:
“The term was cited by only 56 of the S&P 500 this quarter, down 24% (from 74 mentions) since last quarter and down roughly 64% (156 mentions) since its peak in Q4 of 2021.”
However, executives basing company decisions on politics, rather than on profit potential, may simply have gone underground, Axios says in its article titled “Corporate America is rebranding ESG”:
“Just because the term 'ESG' has fallen out of favor, doesn't mean these initiatives are dying off. Corporate communicators and other business leaders have simply become more judicious about how and when to message about them.”
Nonetheless, earlier this month, S&P Global, an international debt rating agency, dropped ESG scores from the calculation it uses to assess companies’ debt risk. In 2021, the agency began incorporating ESG scores (which measure a company’s capitulation to left-wing identity politics and climate ideology) into its determination of a company’s debt rating.
Thus, companies that didn’t toe the left-wing line were punished with higher borrowing costs – or even denied loans.
S&P Global says it will continue to provide information regarding a company’s ESG conformance, but only in “narrative” form.