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100% Increase in S&P 500 Companies Citing 'ESG' on Earnings Calls in Q2 vs. Q1

Earnings

By John Butters  |  September 20, 2019

During each corporate earnings season, it is not unusual for companies to comment on their ongoing corporate goals and initiatives. Given the growing focus on environmental, social, and governance factors by investors, did companies in the S&P 500 comment on these factors during their earnings conference calls for the second quarter?

To answer this question, FactSet searched for the term “ESG” in the conference call transcripts of all the S&P 500 companies that conducted earnings conference calls from June 15 through September 14.

Companies Citing ESG

Of these companies, 24 cited the term “ESG” (in reference to environmental, social, and governance factors) during their earnings calls. Although this number is only 5% of the companies in the index, it is double the number of companies from the previous quarter (12) and the highest overall number of companies going back two years. At the sector level, the Financials (7) sector had the highest number of companies discussing “ESG” on Q2 earnings calls of all 11 sectors. However, the Real Estate sector had the largest increase (+4) in the number of companies citing “ESG” on earnings calls in Q2 relative to Q1.

Companies Citing ESG by Sector

Broadly speaking, almost all the companies that discussed ESG on their earnings calls in Q2 either discussed their own corporate ESG initiatives and reporting (17) or discussed ESG-related businesses, products, or services (7).

However, the distinction between a company’s own ESG initiatives and ESG-related businesses, products and services may be blurring. As Xylem noted in their earnings call, “…we don't have a sustainability strategy that sits separate from our business strategy. They go hand-in-hand.”

It will be interesting to track the number of S&P 500 companies that cite “ESG” in their earnings calls going forward to see if the rise in these citations in Q2 reflects a one-time event or an ongoing increase.

Specific comments on “ESG” from these companies can be found in the full Earnings Insight Report.

Download the latest Earnings Insight

John Butters

Senior Earnings Analyst

John’s weekly research report, Earnings Insight provides analysis and commentary on trends in corporate earnings data for the S&P 500, including revisions to estimates, year-over-year growth, performance relative to expectations, and valuations. He is a widely used source for the media and has appeared on CNBC, Fox Business News, and the Business News Network. In addition, he has been cited by numerous print and online publications such as The Wall Street Journal, Financial Times, The New York Times, MarketWatch, and Yahoo! Finance.

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