There has been a significant increase in companies discussing environmental, social and governance factors on earnings calls according to research by Nasdaq.
Nasdaq used proprietary natural language processing tools to analyse more than 3,000 earnings transcripts across the Russell 3000 and MSCI USA ESG Leaders indices in the first quarter of this year.
Nearly two thirds, 65%, of companies in the Russell 3000 discussed ESG on their results calls in the first three months of this year, up 19% quarter-on-quarter.
Three quarters, 76%, of companies classified as MSCI USA ESG Leaders discussed ESG in the first quarter of this year, up 15% from the previous quarter. Nearly half, 49%, of MSCI USA ESG Leaders also discussed climate transition, up from 28% in the previous quarter.
In addition, nearly half of ESG-related questions from sell-side analysts during the Q&A portion of the earnings call were also related to climate transition. Analysts asked company management about climate change three to four times more frequently than any other topic (see charts top and below).
Shea Drake and Michele Holtkamp, Senior Analysts at Nasdaq ESG Advisory, said in a report: “Despite the current macroeconomic environment, industrials and utilities are having the greatest number of conversations around clean energy, suggesting the energy transition is likely continuing its momentum.”
Although large and mega-cap companies are leading the conversation in ESG, the analysts said small and mid-cap companies are also starting to discuss broader ESG topics as well.
“Regardless of company size, having a statement prepared on the current state of ESG at your company is becoming an area of significance, and we expect these trends to persist over the coming months,” added the report.
