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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 11, 2020

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 5.

Of these companies, 60 cited the term “ESG” (in reference to environmental, social, and governance factors) during their earnings calls. Although this number is only 12% of the companies in the index, it reflects a 100% increase compared to the number of companies citing “ESG” in the previous quarter (30) and is the second highest overall number of companies going back at least four years.

Number of S&P 500 Companies Citing ESG on Earnings Calls

What drove the substantial increase in citations for “ESG” during in earnings calls in Q2 relative to Q1? At the sector level, nine of the 11 sectors recorded an increase in the number of companies citing “ESG” on a quarter-over-quarter basis. However, the Energy (+6), Consumer Staples (+5), and Industrials (+5) sectors witnessed the largest increases in the number of companies citing “ESG” on earnings calls in Q2 compared to Q1. These three sectors accounted for more than half (16) of the total increase (30) for the index.

Number of S&P 500 Companies Citing ESG on Earnings Calls Q220 vs Q120

It is important to note that a large number of S&P 500 companies that did not cite “ESG” on earnings calls for Q2 2020 did address racial equality and justice issues. Overall, 144 S&P 500 companies (including 125 companies that did not cite “ESG” on their earnings calls) cited at least one of the following terms in reference to racial equality or justice issues on their Q2 earnings calls during this time frame: “equality,” “inequality,” “justice,” “injustice,” and “racism.” In Q1 2020, just two S&P 500 companies cited at least one of these terms over a comparable period in reference to racial equality or justice issues.

It will be interesting to see if S&P 500 continue to discuss ESG and racial equality and justice issues going forward.

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John Butters

Vice President, Senior Earnings Analyst, Investor Relations

Mr. John Butters is Vice President and Senior Earnings Analyst at FactSet. His 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, The Financial Times, The New York Times, MarketWatch, and Yahoo! Finance. Mr. Butters has over 15 years of experience in the financial services industry. Prior to FactSet in January 2011, he worked for more than 10 years at Thomson Reuters (Thomson Financial), most recently as Director of U.S. Earnings Research (2007-2010).

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