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ESG/Sustainability: Anticipating 2019 On The Heels Of 2018 Developments

Pamela Styles

Among many astounding developments pertaining to ESG/Sustainability in the past year, the ISS launch of its Environmental & Social Quality Score appears to have captured the attention of most remaining corporate boards on the fence about proactive attention to their company’s sustainability stance and strategy.

Corporate board directors and executive leadership should anticipate robust stakeholder attention to ESG/Sustainability developments throughout 2019. It may be time to muster company resources to get on-board with the trend.

The mainstream ESG/Sustainability train is going high speed in 2019

It is poignant that the nearly 50-year-old National Investor Relations Institute (NIRI) professional association just formally announced its first-ever ESG-disclosure policy statement on January 30, 2019.  In the statement, the NIRI Board effectively acknowledges that ESG/Sustainability is here to stay and encourages IR professionals to become knowledgeable and proactive to address growing investor and stakeholder interest.

Select 2018 ESG/Sustainability announcements

While recognition of the rapid growth of ESG/Sustainability in the mainstream by both investors and leading corporations pre-date 2018, the exponential rate of attention accelerated dramatically in 2018.  The following table contains a partial list of some of the bigger announcements:

  • January 17: BlackRock Chairman Larry Fink releases letter to CEOs on long-term purpose and ESG
  • February 2: Launch of ISS Environmental & Social Quality Score
  • February 3: Inaugural launch of Barron’s “100 Most Sustainable Companies In The U.S.”
  • March 8: ISS Report – E&S overtake governance in U.S. shareholder proposals in 2017 with E&S accounting for 54 percent of all ESG proposals — up more than 40 percent from 29 percent reported in 2012
  • March 20: Governance and Accountability Institute report finds 85 percent of S&P 500 Index companies published sustainability reports in 2017.
  • October 1: Petition to SEC for rule-making on SEC disclosure
  • October 31: U.S. SIF semi-annual update reports 26 percent (or $1 in $4 AUM in U.S. ($12trn) now include ESG in investment decision making (a 38 percent increase since 2016)
  • December 5: FTSE Russell and Sustainalytics announce strategic partnership to serve the rapidly growing demand for ESG integration into investment strategies. Initial products anticipated 1H 2019.

Using AlphaSense to show increasing ESG/Sustainability references

Using AlphaSense to search for ESG + Sustainability, we can observe that ESG/Sustainability references have been increasing in SEC proxy filings by all cap size companies, and earnings and conference transcripts by Mega Cap companies.

While not a large number, search results identified Mega Cap companies had 16 ~2018 earnings call transcripts with ESG/Sustainability references, up from 3 in ~2017, and similarly 31 ~2018 earnings and conference transcripts, an increase of 35 percent from 23 percent in ~2017.

Looking Ahead

Now that both company boards and investor relations are being encouraged by two top influencers in their professional worlds to get on board with ESG/Sustainability, 2019 will likely be another year with astounding advances in ESG/Sustainability communications developments.

Pamela Styles is principal of Next Level Investor Relations LLC, a strategic consultancy with dual Investor Relations and ESG/Sustainability specialties.

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