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To do or not to do ESG on earnings calls?
To do or not to do ESG on earnings calls?
S&P Global Market Intelligence’s Perception Analytics team helps steer your C-suite discussions, shape investor perceptions, and differentiate your investment case using candid investor feedback.
The team spoke to 50+ investors and sell-side analysts to uncover whether or not the market advises and expects companies to provide ESG commentary during their quarterly earnings calls and discovered that more than half of the investment community does not see ESG as a critical agenda item for earnings calls.
Should companies discuss ESG on earnings calls?
51%
21%
28%
Yes
Indifferent
No
51%
28%
21%
51% of respondents DO NOT recommend companies to share ESG information during earnings calls because they believe that ESG initiatives and strategies are mainly long-term objectives, spanning across a multi-year period, while quarterly earnings calls are short-term focused with limited time to expand on topics beyond the financials and near-term performance. Because of this, they caution companies against including agenda items that distract from the quarterly highlights and take up valuable time. Instead, investors suggest that dedicated ESG calls to deep dive into material topics and showcase Sustainability initiatives are more appropriate.
"Trying to pressure companies to come up with ESG topics to talk about every quarter as if something has changed, is going to be a little bit arbitrary. This is because ESG issues are very long term, so you are not going to need an update every quarter unless something happened in that quarter. If there is really good information or KPIs, then the company can put a slide in its investor presentation.” - North American investor
"I know ESG is very important for other people, but that's not a priority for my funds. I don’t think companies should share those updates. Earnings calls go on quite long enough. People start to fade away when these things go over an hour, so if you start adding a whole other chapter in terms of ESG reporting, that could be done more effectively via a press release or presentation on the IR portion of the website.” - European Portfolio Manager
Investment professionals who DO recommend sharing ESG information during quarterly earnings calls emphasize that these discussions should consist of a succinct, 1-2 slide update on a company’s progress against its ESG initiatives so that the market is kept abreast of key developments. It is important to only include impactful updates and discuss how they directly affect fundamentals and performance. For some, communicating quarterly ESG information highlights a C-suite’s commitment to achieve its ESG goals and demonstrates its integration into the broader company’s corporate strategy. This can help avoid perceptions that ESG is a secondary consideration.
"ESG updates and information are helpful on earnings calls as long as it is not just flowery language. It needs to be backed up by metrics and aligned with a company’s ESG goals. They need to talk about what their goals are and how they are advancing towards those goals.”
- South American Portfolio Manager
“It’s probably not the case for every company, but if companies can show regular progress on some of their ESG projects then that would be good. These regular updates give an opportunity to show a trend. Companies give financial numbers, so why not ESG numbers? Maybe it's not possible for every company to do it because it might be too complex. But generally, I would say this information should be included on earnings calls.” - European Portfolio Manager
“It definitely helps to discuss ESG on quarterly calls because it reminds everyone that ESG is important to the executives. It is also important to have some of the internal ESG executives on the call periodically.” - North American Investor
Interestingly, a portion of investors express indifference to ESG information sharing on quarterly calls, stating that it either does not hurt to include any additional information and does not move the needle one way or the other.
S&P Global Market Intelligence
The Perception Analytics team draws upon over three decades of experience in gathering unbiased market feedback, analyzing stakeholder sentiment, and delivering actionable insights to our clients.
By leveraging a Perception Study, our team can help you navigate difficult corporate communication and understand the Street’s general and ESG expectations.
Perception Analytics is complemented by a suite of Investor Relations services, including Capital Surveillance, Investor Targeting, Sustainability Advisory, and others.