S&P 500 Executives Back Off ‘ESG’ Reports in Earnings Calls

Walmart, Occidental Petroleum and pest control conglomerate Rollins share a common approach to environmental, social and governance issues: their executives are talking less about their ESG reports, without abandoning the work behind them.

The companies are among 13 S&P 500 members whose earnings calls dropped direct references to ESG, sustainability and corporate responsibility reports and other similar publications after 2021, according to a Bloomberg Law analysis. ESG-related report mentions among S&P 500 companies overall peaked in 2021 on earnings calls before decreasing in 2022 and 2023.

The decline comes amid a conservative backlash against the term ESG. But ESG-related reports have already become widespread, and companies are increasingly incorporating their sustainability plans into their core business strategies, reducing the need to rely on a standalone ESG publication, said professionals who study corporate messaging.

“It’s a basic expectation,” said Suzanne Shelton, CEO of Shelton Group, an ERM Group company that advises companies on sustainability communications. “It’s like you saying, ‘I put on pants today.’ Like, well yeah dude, I expect you to put on pants.”

Bloomberg Law reviewed S&P 500 earnings call transcripts for mentions of “ESG report,” “sustainability report,” “corporate responsibility report,” “corporate social responsibility report” and “climate report” since 2019. References to the reports hit a high of 261 in 2021, then dropped off for two consecutive years to a total of 182 last year.

Executives hold earnings calls periodically to discuss their companies’ financial performance with investors, analysts and reporters.

Company Calls

CEOs Doug McMillon of Walmart Inc. and Vicki Hollub of Occidental Petroleum Corp., along with then-CFO Eddie Northen of Rollins Inc., were the last executives to discuss their companies’ ESG-related reports on earnings calls in 2021.

McMillon at the time encouraged participants on a Walmart call to look at the company’s ESG report to “understand our priority issues along with the progress we’re making against our commitments.” His remarks were similar to comments he made about the retail giant’s ESG report in 2020.

Hollub said Occidental’s climate report received a “positive reception” as she spoke about the publication for a final time on an earnings call in 2021. She previously cited the release in connection with the oil producer’s efforts to reduce greenhouse gas emissions.

Northen brought up Rollins’ sustainability report on an earnings call for the last time in 2021 as he discussed the pest control company issuing its first such publication in 2020 and its plans to put out a second edition. Rollins hasn’t stopped publishing sustainability reports, but hasn’t mentioned them by name in earnings calls since.

Companies’ messaging on earnings calls is based on what investors and other participants want to discuss, said Paul Washington, executive director of the ESG Center at the Conference Board, a business think tank. Asset managers want to hear more about how companies are affected by issues like inflation and artificial intelligence, as sustainability information is widely reported now and investment firms are facing the ESG backlash, he said.

“If investors aren’t bringing it up, it’s not going to be as much at the forefront of what companies present on their earnings calls,” Washington said.

A Walmart spokesperson declined to comment. A Rollins representative didn’t return requests for comment. Occidental has “regularly addressed our approach to climate on our investor conference calls, as well as in the accompanying quarterly presentations, through updates on the implementation of our low-carbon initiatives, which will not only help us achieve our net zero ambitions but can help others reach their goals,” a spokesperson said.

Conservative Backlash

BlackRock Inc., the world’s biggest asset manager, has faced frequent attacks from Republicans and right-leaning groups claiming it prioritizes ESG investments over higher financial returns for its customers. In December, House Judiciary Chairman Jim Jordan (R-Ohio) subpoenaed BlackRock for documents in connection with an ESG investigation and Tennessee Attorney General Jonathan Skrmetti (R) sued the firm over allegations it misled investors about its environmental, social and governance strategy.

Larry Fink, BlackRock’s CEO, reportedly stopped mentioning ESG due to the acronym’s politicization last year. The firm last included the term in its annual report on its engagement priorities with companies in 2022.

Still, BlackRock continues to focus on ESG issues, like climate change. The firm’s most recent engagement priorities report for 2024 lists “climate-related risk” as a focus, while noting it’s “not our role to engineer a specific decarbonization outcome in the real economy.”

ESG efforts at companies are less of a “side project” than they were 15 years ago and now are “just part of the business strategy,” Kathleen McLaughlin, Walmart’s chief sustainability officer, said during a Goldman Sachs conference last year, according to a transcript of her remarks.

Like sustainability report talk on earnings calls, mentions of the ESG acronym itself on S&P 500 earnings calls also decreased after 2021 following increases in 2019 and 2020, according to transcripts reviewed by Bloomberg Law. The mentions dropped by more than half from 2021 to 2023 after more than quadrupling from 2019 to 2021.

Companies have become more “sophisticated” about discussing their ESG-related reports and sustainability more broadly, said Scott Shepard, a fellow at the National Center for Public Policy Research, a conservative think tank that has challenged Nasdaq Inc. and other companies for supporting ESG issues, like diversity.

“If they thought they would look better and the price of the company would rise, they’d bring it up,” Shepard said.

ESG’s Future

Earnings calls aside, companies are increasingly citing ESG-related issues and reports in at least one area. The number of ESG-related report mentions in annual 10-K reports summarizing companies’ operations and financial performance for the Securities and Exchange Commission has grown every year since 2019, according to a Bloomberg Law analysis in December.

For instance, Walmart, Occidental and Rollins all discuss elements of their ESG-related reports in their 10-Ks and elsewhere, regardless of whether they mention the publications by name.

Rollins said in its 10-K from 2023 that it’s aiming to create an inclusive company through its “workplace inclusion” strategy, which it also discusses in its latest sustainability report. Walmart and Occidental used their 10-Ks from 2023 to talk about greenhouse gas emissions reduction targets that also come up in their latest ESG reporting.

The SEC during the Biden administration has ramped up its scrutiny of climate disclosures and other ESG reporting, with the agency targeting April to issue requirements for companies to share their emissions data with investors. California and the European Union also approved corporate emissions reporting mandates, with some starting to take effect this year.

Companies have to pay attention to ESG issues, even if they’re avoiding the label, said Marian Macindoe, head of environmental, social and governance stewardship at Parnassus Investments LLC, which focuses on sustainable investing.

“It’s not about selling widgets,” Macindoe said. “It’s about being able to sell your products to customers who want them in an environment where your product isn’t regulated out of existence and you’re not litigated so your stock price drops 50% in one day.”