The ESG Fad May Be Over

Number of S&P 500 companies mentioning specific topics in quarterly earnings calls

2021 was an odd year: “Get a vaccine passport”, “buy Dogecoin” and “make money from home” all topped Google Trends for the year. If corporations had a similar trend list, 2021 would have been the year of environment, social and governance (ESG) messaging.

Background: While ESG has been around for a long time, 2021 was peak corporate hype with more than 150 of 500 the largest public companies in the US – known as the S&P 500 – mentioning the term explicitly in their quarterly earnings calls.

But like Dogecoin, ESG’s fortunes have reversed. So far in the second quarter of 2023, the term has been mentioned by less than 75 of the S&P 500 companies.

Zoom out: While it’s possible that ESG has simply become normal practice for companies, it’s clear that managers see less of a need to signal the centrality of ESG to corporate strategy. If nothing else, ESG helped usher in more transparency when it comes to corporate sustainability reporting.

Looking for the next ESG (or Dogecoin) to hitch your investing wagon to? May we suggest getting all aboard the AI hype train? Toot toot. 

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