More Than One in Four S&P 500 Companies Cited “ESG” on Earnings Calls for Q4

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 fourth 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 December 15 through March 5.

Of these companies, 129 cited the term “ESG” (in reference to environmental, social, and governance factors) during their earnings calls.

This number is the highest overall number of S&P 500 companies citing “ESG” on earnings calls going back at least 10 years. The previous record was 79, which occurred in the previous quarter.

On a quarter-over-quarter basis, 50 more S&P 500 companies cited “ESG” on earnings calls in Q4 2020 relative to Q3 2020, which also reflects the highest quarterly increase in the number of S&P 500 companies citing “ESG” on earnings calls going back at least 10 years. The previous record was 40, which occurred in Q4 2019.

What drove the increase in citations for “ESG” during in earnings calls in Q4 2020 relative to Q3 2020?

At the sector level, all 11 sectors recorded an increase in the number of companies citing “ESG” on a quarter-over-quarter basis. The Industrials (+10), Health Care (+8), Financials (+7), Information Technology (+7), and Real Estate (+6) sectors witnessed the largest increases in the number of companies citing “ESG” on earnings calls in Q4 compared to Q3. These five sectors accounted for 76% (38) of the total increase (50) for the index.

It is interesting to note that 154 S&P 500 S&P 500 companies cited “Biden” or “administration” (in reference to the Biden administration) on earnings calls for Q4 2020. For these 154 companies, the government policy that was cited or discussed by the highest number of S&P 500 companies (50) in conjunction with their comments on the Biden administration was climate change and energy policy.

Thus, is it possible the change in presidential administration contributed to the large increase in the number of S&P 500 companies citing “ESG” on earnings calls in Q4 2020 compared to Q3 2020? Of the 129 S&P 500 companies that cited “ESG” on earnings calls for Q4 2020, 48 also cited “Biden” or “administration” on the earnings call. Of these 48 companies, 26 discussed climate change and energy policy in conjunction with their comments on the Biden administration.

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