As a reaction to a backlash from some investors and conservative advocates, companies have noticeably dropped their mentions of green and social initiatives during earnings calls in recent quarters, The Wall Street Journal reported.

Some investors, conservative groups and political leaders see these initiative as “woke investing” and want companies to focus onky on their operations. They have also called for boycotts; in August 2022, 19 state attorneys general wrote to BlackRock, the world’s largest asset manager, in an attempt to force it to reconsider its environmental, social governance (ESG) investing strategy.

Executives at U.S.-listed companies mentioned “ESG,” “diversity, equity and inclusion,” “DEI” or “sustainability” on 575 earnings calls from April 1 to June 5, down by 31 percent from the same period last year, according to data from financial-research platform AlphaSense and cited by the Journal. That is the largest such year-over-year decline, as well as the fifth consecutive quarter of year-over-year drops. CFOs at U.S.-listed companies mentioned the topics on 93 calls from April 1 to June 5, down by 30 percent from the prior-year period, AlphaSense found. 

Still, companies are regularly and voluntarily issuing detailed sustainability reports, disclosing greenhouse gas emissions and tying a portion of their executive compensation to ESG metrics, the Journal reported. CFOs are also preparing for forthcoming Securities and Exchange Commission (SEC) rules on ESG.

Seventy percent of U.S. chief executives said that their company’s ESG programs improved their financial performance, according to KPMG’s 2022 CEO Outlook survey.

Some of the ESG silence on earnings calls could be attributable to corporate efforts to avoid “greenwashing,” or touting overly optimistic projections for sustainability, Rob Fisher, KPMG’s U.S. ESG leader, told the Journal. By being more circumspect about what they put out in the public, he said, companies can avoid running afoul of new and proposed sustainability reporting requirements.

Companies' reticence to discuss their ESG programs also has the effect of weakening transparency, which is generally not helpful for investors, said James McRitchie, an individual investor in nearly 200 companies, most of which lead ESG programs, in an interview with the Journal.

“It would be good if companies fight back and say why [ESG initiatives are] good,” he said. “I think companies are going to hush it up more, but they’re going to keep on going with the initiatives.”