Amidst another round of earnings reports, there was a noticeable decline in the inclusion of environment, social, and governance (ESG) strategies in C-suite discussions (discussions at the highest level about strategic decision-making and company direction), marking a departure from the heightened prominence observed in the fourth quarter of 2021. According to data from FactSet, only nine direct mentions of ESG have surfaced among S&P 500 companies in recent weeks, compared to the substantial 156 mentions during the peak in the final quarter of 2021.
Yahoo Finance’s analysis reveals that current references to ESG are either brief or indicative of a more politically charged environment. During an earnings call, MSCI’s CFO Andy Wiechmann noted a more measured approach to integrating ESG. While a few notable entities like NASDAQ, Cencora, and Otis Worldwide still touch upon the term, most well-known brands have distanced themselves from it.
Additionally, a new study from ESSEC Business School has found that the cumulative flow of investments into US ESG funds has declined due to increased greenwashing and skepticism toward environmental, social, and governance-focused investing. Greenwashing refers to companies presenting false or misleading information about the level of environmental friendliness of their products or services.
However, skepticism and a decline in explicit mentions do not equate to a diminished discourse on ESG-related matters. The Left has figured out one way to overcome the unpopularity of ESG: renaming it something else and hoping people don’t realize it’s the same thing. Conversations of ESG continue through alternative terminologies, such as ‘green economy’ and ‘energy transition,’ reflecting the dynamic landscape of corporate discussions.
Recent earnings reports from major Wall Street players illustrate this divergence. Despite no direct mention of ESG by major banks, issues related to climate change remain at the forefront. JPMorgan Chase’s CEO, Jamie Dimon, emphasized the ongoing need for increased spending in the green economy and expressed caution due to significant and unprecedented forces, including climate change.
Similarly, BlackRock’s CEO Larry Fink, a prominent advocate for ESG, recently changed his terminology. In his latest communication to shareholders, Fink referenced ESG, “sustainability,” and “purpose” only four times, a stark contrast to 2020, when these terms were featured 32 times in his shareholder letter. Fink’s future approach involves discontinuing the use of the term ESG altogether. Fink believes that the term ESG is being “weaponized.” Nevertheless, Fink emphasized the importance of a changing climate and the energy transition in a significant deal announcement.
Big Tech companies have followed suit, with little explicitly mentioning ESG but a considerable focus on climate-related matters. During a recent call, Apple’s CEO, Tim Cook, highlighted the company’s environmental initiatives.
Moreover, alternative phrases like “sustainable investing,” “responsible business,” and “transition investing” have emerged as substitutes for discussing ESG-related issues without using the term itself.
A Global Strategy Group poll indicates bipartisan support for companies making a positive impact on their communities, but Republican support decreases when the term ESG is introduced. Critics of ESG have promoted what they term “woke capitalism” and view the declining use of the term ESG as a victory.
Notable successes against ESG include Vanguard’s withdrawal from the Net Zero Asset Managers initiative and the closure of some ESG funds due to shifting investor interests.
Despite the polarizing nature of the term, ESG advocates see potential benefits if the controversial term is phased out, viewing it as an opportunity to prevent “greenwashing” and promote a more direct case for underlying principles. High-profile figures like Jamie Dimon are seen as influential voices making a compelling case for considering climate issues as smart business decisions.
