Abstract
One of the most important forums for companies to disclose financial information to the market is the quarterly earnings call. Environmental, social and governance (ESG) issues are gaining increased traction among institutional investors but are yet to find a place in the earnings call. We launched the Action Lab project, which was a facilitated process of investor relations and sustainability functions working together to communicate ESG factors in the earnings call setting. Three publicly listed companies committed to work with us in the lead-up to the third quarter 2017 call, when they would include ESG dimensions in their presentations. Five major challenges emerged from our research. First, there is a chicken and egg situation in which companies do not convey ESG information because they think analysts are not interested, and analyst do not ask ESG-related questions because there is no ESG-related information for them to base questions on. Second, it is challenging to quantify ESG factors in ways that fit analysts’ models. Third, the earnings call is a highly ritualized event and there is a reluctance to change the format. Fourth, there is a fear on the company side that ESG issues might be perceived as greenwashing, especially in times of weaker financial performance. Finally, ESG perspectives are typically too long-term to fit the focus of a short-term earnings call, and might therefore be better suited to other forums.