Midway through another earnings season, environmental, social, and governance (ESG) strategy moves are about to take on new depth as executives increasingly talk about them.
Out of hundreds of earnings releases in recent weeks, only nine S&P 500 companies have directly mentioned the politically controversial term, according to data as of Friday afternoon from financial data firm FactSet. It is said that
This is a far cry from the 156 companies mentioned in the S&P 500 in the fourth quarter of 2021, when usage of the term peaked, according to the company.
And according to Yahoo Finance’s analysis, this year’s quotes are either very brief or reflect a more volatile political climate.
“Clients are taking a more measured approach to how they integrate ESG,” said Andy Wiechman, chief financial officer at financial firm MSCI, just to name a few. This was stated at the financial results conference.
The term has also been used in several other places, including recent calls for stock index operator Nasdaq (NDAQ), pharmaceutical wholesaler Sencora (COR), and elevator maker Otis Worldwide (OTIS). However, almost all well-known names completely move away from this term.
That doesn’t mean conversations around the underlying issues of ESG aren’t happening. The topic seems to be kept alive through the use of various buzzwords and simply open discussions about how companies incorporate climate change into their business decisions.
New terms such as “green economy” and “energy transition”
The recent earnings of some of Wall Street’s top companies are perhaps the best example of the divergent trends.
No major banks have directly addressed ESG, but climate change and other issues remain topics of great interest, according to FactSet.
JPMorgan Chase (JPM) CEO Jamie Dimon made sure his investors were aware of It pointed to the “continued need for increased green economy spending” and added that climate change is one of the “significant and somewhat unprecedented impacts that forces us to be alarmed.”
JPMorgan Chase CEO Jamie Dimon attended with other bank CEOs in Washington last December. (Win McNamee/Getty Images) (Win McNamee via Getty Images)
Another example was revealed during the earnings call of BlackRock (BLK), the world’s largest asset management company.
CEO Larry Fink has become one of the faces of the ESG movement in recent years, thanks to his annual letter urging companies and long-term investors to better prepare for climate change. However, he has recently become disillusioned with the term and announced last June that he would no longer use it.
He remained true to his promise at BlackRock’s January 12 earnings call. The company revealed plans to buy private equity firm Global Infrastructure Partners, but Fink didn’t mention ESG at all, saying climate change and the “energy transition” were driving the $12.5 billion acquisition. revealed that this is an important factor.
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Larry Fink, CEO of BlackRock. (Sean Gallup/Getty Images) (Sean Gallup via Getty Images)
“If we are to decarbonize the world… capital and infrastructure will be very much needed,” Fink told investors, adding, “The imbalance in supply and demand creates attractive investment opportunities for our clients. ” he added.
We saw the same trend last week, when Big Tech companies took center stage. There was little mention of ESG, but there was a lot of discussion about things like climate.
“In recent months, we’ve also made significant progress on our environmental efforts,” Apple (AAPL) CEO Tim Cook said on a conference call.
Apple CEO Tim Cook took to the stage in New York City on Friday to coincide with the launch of the Apple Vision Pro headset. (Michael M. Santiago/Getty Images) (Michael M. Santiago via Getty Images)
Additionally, terms such as “sustainable investing,” “responsible business,” and “transition investing” are also used by business leaders and corporate advisors as another way to talk about the issues raised by ESG without using the term itself. has emerged in recent months.
“Awakened Capitalism”
A recent Global Strategy Group poll found overwhelming bipartisan support when Americans were asked whether they support companies that “try to have a positive impact on their communities.” It turned out. When the term ESG is introduced, its support among Republicans drops dramatically.
The term’s popularity comes as anti-ESG advocates work to stop what they call “woke capitalism,” which they say prioritizes political agendas over maximizing investor returns. are quick to claim that the decline is a victory on their side.
ESG efforts have also seen some high-profile victories in recent years, including asset management giant Vanguard withdrawing from a climate change-focused consortium called the Net Zero Asset Managers Initiative. Some ESG funds are also closing as investors’ attention shifts elsewhere.
But ESG advocates say there could be a glimmer of hope on their side if the controversial term is largely taken off the table.
“Obviously, the term ESG is polarizing,” Randell Leach, CEO of a community bank called Beneficial State Bank that focuses primarily on social responsibility, recently said. said in an interview.
But he’s fine with that, saying the changes will stop companies from promoting ESG as a cover for “greenwashing” and instead force them to more directly assert their underlying principles. He said he thinks this is a way to stop it.
“The market is evolving,” he added.
Mr. Leach said Mr. Dimon’s recent comments show that the world’s most powerful banker can now assert more directly that considering climate change is “just smart business.”
Ben Werschkul is Yahoo Finance’s Washington correspondent.
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