Companies test out different ways to talk about ESG without saying ‘ESG’

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Midway through another earnings season, the free-fall in C-suite mentions of the movement for environment, social, and governance (ESG) strategies is on pace to plumb new depths.

There have been just nine direct mentions among S&P 500 companies of the politically controversial term amid the sea of hundreds of earnings calls in recent weeks, according to data from financial data company FactSet through Friday afternoon.

That is a far cry from the 156 mentions among S&P 500 companies during the fourth quarter of 2021, when usage of the term peaked according to the company.

And citations this year are either very brief or reflect a more charged political landscape, according to a Yahoo Finance analysis.

“Clients are taking a more measured approach to how they integrate ESG,” noted Andy Wiechmann, the chief financial officer of finance company MSCI (MSCI) on his company’s earnings call, in just one example.

The term has come up in a handful of other places, including on recent calls for stock market index operator NASDAQ (NDAQ), drug wholesaler Cencora (COR), and elevator maker Otis Worldwide (OTIS). But nearly all household names have moved away from the term entirely.

That doesn’t mean that a conversation around the issues underlying ESG has been absent. Through the use of different buzzwords — or simply a straight-ahead discussion of how companies factor climate change into business decisions — the topic appears to be alive and well.

New terms like ‘green economy’ and ‘energy transition’

Recent earnings from some of the top companies on Wall Street are perhaps the best example of the divergent trends.

While no major bank brought up ESG directly, according to FactSet, climate and other issues remained a topic of much interest.

JPMorgan Chase (JPM) CEO Jamie Dimon made sure his investors were aware of “an ongoing need for increased spending due to the green economy,” adding that climate change was one of a few “significant and somewhat unprecedented forces [that] cause us to remain cautious.”

Jamie Dimon, CEO of JPMorgan Chase, during an appearance alongside other banking CEOs in Washington last December. (Win McNamee/Getty Images) (Win McNamee via Getty Images)

Another example came on an earnings call for BlackRock (BLK), the world’s largest money manager.

CEO Larry Fink has been among the faces of the ESG movement in recent years thanks to his annual letters urging companies and long-term investors to do more to prepare for climate change. But he recently grew disenchanted with the term and announced last June that he would stop saying it at all.

He stayed true to that pledge on BlackRock’s Jan. 12 earnings call. The company unveiled plans to buy private equity firm Global Infrastructure Partners but — without ever saying ESG — Fink made clear that a changing climate and “the energy transition” were key factors driving the $12.5 billion deal.

DUBAI, UNITED ARAB EMIRATES - DECEMBER 04: Larry Fink, CEO of Blackrock, attends a roundtable discussion titled:

Larry Fink, CEO of BlackRock. (Sean Gallup/Getty Images) (Sean Gallup via Getty Images)

“If we are going to decarbonize the world … capital and infrastructure is going to be very necessary,” Fink told investors, adding “that supply/demand imbalance creates compelling investment opportunities for our clients.”

The same trend held in the past week as Big Tech companies took center stage. There was little mention of ESG, but plenty of discussion of things like the climate.

“In recent months, we’ve also taken significant strides in our environmental work,” Apple (AAPL) CEO Tim Cook noted on his call.

NEW YORK, NEW YORK - FEBRUARY 02: Apple CEO Tim Cook arrives as people stand in line to purchase the Apple Vision Pro headset at the Fifth Avenue Apple store on February 02, 2024 in New York City. Apple CEO Tim Cook and Senior Vice President of Retail and People Deirdre O'Brien were at the opening of the Apple store on Fifth Avenue as the company begins its sale of the Vision Pro headset, the company's first new product in seven years.  (Photo by Michael M. Santiago/Getty Images)

Apple CEO Tim Cook in New York City on Friday as the Apple Vision Pro headset began to go on sale. (Michael M. Santiago/Getty Images) (Michael M. Santiago via Getty Images)

In addition, terms like “sustainable investing,” “responsible business,” and “transition investing” have also been floated by business leaders and corporate advisers in recent months as other ways to talk about the issues raised by ESG without using the term itself.

‘Woke capitalism’

A recent Global Strategy Group poll found overwhelming bipartisan support when Americans are asked whether they support companies “that try to have a positive impact on their communities.” That support falls dramatically among Republicans once the term ESG is introduced.

Anti-ESG advocates are quick to claim that the declining prominence of the term is a win for their side as they work to stop what they call “woke capitalism,” which they say prioritizes a political agenda over maximizing returns for investors.

The push against ESG has also scored some high-profile victories in recent years, such as when money management giant Vanguard withdrew from a climate-focused consortium called the Net Zero Asset Managers initiative. Some ESG funds are also closing as investor interest moves elsewhere.

But ESG advocates say there could be a silver lining for their side if the controversial term is largely taken off the table.

“Obviously the word ESG has been polarized,” said Randell Leach, the CEO of a community bank called Beneficial State Bank largely devoted to social responsibility, in a recent interview.

But he’s OK with that, saying he sees the change as a way to stop companies from pushing ESG as a cover for “greenwashing” and instead forcing a more direct case for the underlying principles.

“The market has evolved,” he added.

Dimon’s recent comments, Leach says, show the most powerful banker in the world can more directly make an affirmative case that taking climate into account “is just smart business.”

Ben Werschkul is Washington correspondent for Yahoo Finance.

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