On Earnings Calls, Less Talk About Diversity, Sustainability

As a backlash intensifies from some investors and activists, mentions of green and social initiatives during corporate earnings calls have fallen sharply in recent quarters, reversing the trend of the past few years, The Wall Street Journal reports. 

Some investors, conservative groups and political leaders have seized on corporate support of green and social causes to rally their constituents — for example, by calling for boycotts of brands that advertise their support of the LGBTQ+ community in the wake of recent disputes with Target and Bud Light.

Finance officers and other executives at U.S. companies are making fewer public statements about their organizations’ environmental and employee-diversity efforts. Executives 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. 

It was the largest such year-over-year drop and the fifth consecutive quarter of year-over-year declines, following a spike in such discussions and corporate social efforts after the death of George Floyd in May 2020.

“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,” Jason Jay, senior lecturer of sustainability at Massachusetts Institute of Technology, told the Journal.

But even as many companies have started avoiding discussions of divisive issues, there is little sign that public companies are pulling back from the initiatives themselves, such as DE&I employee training and emissions reductions.

Rob Fisher, ESG leader at KPMG, said that the silence about such initiatives on earnings calls could result from corporate efforts to avoid “greenwashing,” or touting overly optimistic sustainability projections.