Significant decline | New data reveals that the US is undergoing an ESG disaster

New data reveals that the US is undergoing an ESG disaster

Recent data from UCEM highlights a significant decline in the discussion and prioritization of environmental, social, and governance (ESG) issues within the corporate world.

This trend is particularly pronounced in the US, where mentions of ESG in financial reports have plummeted by 60% over the past year. This is a stark contrast to Europe, which has seen a comparatively modest ten per cent decline.

Political backlash stifles ESG conversations

The reduction in ESG mentions can largely be attributed to a growing fear among US companies of political backlash.

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Republican politicians and conservative groups have launched numerous legal challenges against corporate policies deemed "woke," arguing that these initiatives violate the fiduciary duty to maximize shareholder returns.

This has led to a marked decrease in discussions surrounding climate change, diversity, equity, and inclusion.

“Companies are worried about getting sued and heckled by Republican shareholders and state-level officials,” Marcela Pinilla, Director of Sustainable Investing at Zevin Asset Management recently told Bloomberg. “These anti-ESG proposals continue. So, companies are moderating their message.”

Declining mentions in corporate reporting

An analysis of the financial presentations of the 100 largest listed companies in the US and Europe reveals a dramatic drop in references to ESG issues.

In the current results season, mentions of climate change in the US have decreased by over 60%, from 269 mentions a year ago to significantly fewer this year.

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At JPMorgan Chase & Co’s annual meeting, for instance, CEO Jamie Dimon focused on geopolitics and technology, relegating climate change to a brief mention during the Q&A session.

Human rights mentions have similarly declined in the U.S., from 129 a year ago to 71 this quarter. Conversely, in Europe, human rights mentions have increased from 58 to 104, reflecting a divergence in corporate priorities between the two regions.

However, not all companies are abandoning their ESG commitments. Companies like HSBC, Microsoft, and Google continue to make significant strides in promoting diversity and inclusion. In recent reporting, these firms have reaffirmed their commitment to ESG, demonstrating a steadfast belief to these values, despite the challenging environment.

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