BlackRock’s Larry Fink isn’t the only CEO to no longer use the now-controversial acronym ESG.
ESG, which stands for a focus on environmental, social and corporate governance principles, was mentioned by just 74 S&P 500 companies at corporate conferences held during the first-quarter earnings season, according to data collected by FactSet.
That was the lowest count in nearly three years and below a peak of 156 in the fourth quarter of 2021. Executives are now more likely to mention artificial intelligence (AI)which obtained 110 mentions in calls held from March 15 to June 9.
ESG mentions could fall again when companies start releasing their second-quarter results in the coming weeks.
“Something drastic happened in the last year or so,” said Erick Mokaya, lead author of The Transcriptiona newsletter dedicated to trends in earnings calls.
Don’t expect to hear the term at all when BlackRock (BLK) reports on July 14. Its boss, Fink, recently claimed that he now refuses to say ESG because the term has become “weaponized” and “misused by the far left and the far right.”
BlackRock CEO Larry Fink. (AP Photo/Mark Lennihan)
The pledge was notable because Fink had become the corporate face of this trend over the past decade thanks to years of annual letters to investors urging long-term investors to consider responsible ESG practices when investing ‘evaluate companies.
These comments it earned him criticism from both sides of the ideological spectrum. Some on the right accused him of “awakened capitalism.” Some on the left said Fink’s own firm did not go far enough to reduce its own exposure to climate problems by divesting from oil and gas investments.
BlackRock also became the target of high-profile efforts by state officials, including Florida Gov. Ron DeSantis, to siphon money from BlackRock’s public pensions. Florida withdrew $2 billion from the company as punishment for its ESG stance.
The political focus around the issue continues to increase. House Republicans are aiming to make July “ESG Month” on Capitol Hill as they make efforts to reverse the trend toward good investing. The once-dry investment deadline has also become a central issue in the 2024 GOP presidential campaign.
The story continues
“This one is not right”
Mokaya pointed to a moment last September as a key turning point in how the executive suite deals with ESG.
That’s when JPMorgan Chase ( JPM ) CEO Jamie Dimon appeared before Congress and questioned much of the ESG orthodoxy, saying “we’re not getting this one right.”
Dimon argued that a more nuanced approach to things like climate practices was needed.
“Since then, many more CEOs have become bolder” about questioning previous ESG strategies and downplaying the term, Mokaya said.
Some investors have also pulled out. US sustainable fund inflows hit a seven-year low last year in 2022 amid growing backlash, according to a Morningstar report. The outflows continued through the first half of 2023, according to Refinitiv.
Jamie Dimon, CEO of JPMorgan Chase. (SAUL LOEB/AFP via Getty Images)
July is “ESG month”
The departures and declining mentions of CEO calls coincide with increased heat in the political arena that is expected to continue in the coming months.
DeSantis has signed a radical law prevent state officials from investing public money in ESG efforts. DeSantis has also brought up the issue on his presidential campaign, where he likes to brag that his bill “made a dent” in ESG.
Florida is not alone either. There are currently 26 states proposing anti-ESG investment bills according to a recent study by Morgan Lewis.
House Speaker Kevin McCarthy (R-CA) speaks to reporters on June 20. (Anna Moneymaker/Getty Images)
The campaign activity comes as the House of Representatives plans its own focus on the issue during the month of July.
US lawmakers are poised to make proposals to change the rules governing asset managers as House Republicans seek to roll back the trend even further.
Shareholder activism will also be under the microscope, as will the Biden administration’s handling of the issue. A hearing on “investor protection” is scheduled for July 12 before the House Financial Services Committee.
ESG “is clearly politicized in the US and that’s something that only asset managers and credit institutions have to deal with,” TD Cowen CEO John Miller said recently.
Ben Werschkul is a Washington correspondent for Yahoo Finance.
Click here for political news related to business and money
Read the latest financial and business news from Yahoo Finance
