Executives at U.S. companies are scaling back their discussion of ESG (environmental, social, and corporate governance) and DEI (diversity, equity, and inclusion) topics on earnings calls in response to mounting criticism from consumers. Recent data from financial research platform AlphaSense reveals a significant 31% decrease in such mentions between April 1 and June 5, compared to the same period last year. This decline marks the largest year-over-year drop in mentions and continues a trend observed over the past five quarters, as reported by The Wall Street Journal.
Addressing this shift, Jason Jay, senior lecturer of sustainability at the Massachusetts Institute of Technology, highlighted the strategic choice made by companies, stating, “The easiest thing to do is just to stay out of the conversation and emphasize other aspects of the business that are perceived as less controversial and more aligned with traditional business metrics.”
However, while the reduction in mentions may suggest a response to public sentiment, it is important to note that the evidence of companies scaling back ESG and DEI initiatives remains limited. Many organizations still discuss sustainability reports, greenhouse gas emissions, and tie executive compensation to ESG metrics, indicating a sustained commitment to these issues.
Nonetheless, there are indications that the backlash is exerting an influence. Notably, during earnings calls since March 2022, electronic signature firm Docusign has not mentioned its sustainability initiatives, carbon-neutral status, or net-zero emissions. Similarly, chip maker Qualcomm last specifically addressed ESG topics on an earnings call in February 2022, and meal-kit provider Blu Apron has not discussed ESG since November 2022.
Despite the decrease in public mentions, some investors believe that companies will continue their ESG and DEI initiatives while adopting a more discreet approach. James McRitchie, an individual investor in nearly 200 companies, expressed this viewpoint, stating, “I think companies are going to hush it up more, but they’re going to keep on going with the initiatives,” in an interview with the Journal.
The National Center for Public Policy Research has responded to the perceived shift in corporate priorities by issuing almost double the number of proposals targeting companies compared to the previous year. The organization asserts that companies have a fiduciary duty to maintain a neutral stance on social and political issues.
In a separate development, Anheuser-Busch has experienced substantial losses in market value since the Dylan Mulvaney controversy erupted on April 1. As of the end of May, the company’s market value had dropped by approximately $27 billion. According to data from Dow Jones Market Data Group, Anheuser-Busch’s value declined from $134.55 billion on March 31 to $107.44 billion, marking a nearly 20% decrease and pushing it into the realm of a bear market. Additionally, Bump Williams Consulting estimated a 25.7% drop in Bud Light sales revenues for the week ending May 20 compared to the same week in 2022.
Similarly, retail giant Target has witnessed its share prices endure an extended losing streak, the longest in nearly five years, by the end of May. The company’s market value plunged by a staggering $12 billion, settling at $61.85 billion, following a consumer boycott triggered by the sale of its LGBTQ merchandise.