Corporate mentions of ESG and diversity have dropped sharply amid backlash

These days companies are afraid to do good — or at least to talk about it.

Most recently, rural lifestyle retailer Tractor Supply cut its diversity, equity and inclusion (DEI) efforts following conservative backlash against things like Pride decorations and inclusive hiring practices.

As the Wall Street Journal reported earlier this year, ESG — companies’ previously much-touted environmental, social, and governance efforts — has become sort of a dirty word and diversity goals are disappearing from annual reports. It looks like related terms too are feeling the freeze, as executives try to escape ire — and regulation — over the “woke mind virus.” 

Terms like “diversity,” “responsibility,” “governance,” and “climate change” all seem to have peaked in the last few years on earnings calls, according to data from FactSet. Companies haven’t mentioned “Black lives matter” on an earnings call in over a year.

Firms have long faced criticism from the left over whether pronouncements about things like diversity, gender equity, and environmentalism were just PR stunts rather than meaningful action. More recently, Republican lawmakers have criticized so-called “woke capital,” fighting to steer government investment from assets that take ESG into account. 

Despite those headwinds, Bloomberg Intelligence expects global ESG assets to rise to $40 trillion by 2030, or more than a quarter of all assets under management. A survey they conducted late last year found that 85 percent of the executives and investors “reported that ESG leads to better returns, resilient portfolios and enhanced fundamental analysis.”

That said, a growing number of experts have questioned the initial research that claimed doing good was good for business, with academics unable to replicate the results of the influential 2015 McKinsey paper. In other words, companies may not just be bending to conservative pressure, but to old-fashioned pressure to deliver profits to investors.