Analysts Mum on Sustainability During Earnings Calls

Questions from sell-side stock analysts about corporate sustainability issues remain few and far between on the quarterly earnings conference calls held by publicly traded companies.

More and more institutional investors, however, are digging deep into voluminous sustainability reports to gain a strategic advantage.

Those are some of the observations shared this week during the Bloomberg BNA Sustainability Business Summit in New York.

James Hnat joined JetBlue Airways in 2001 and has listened to every one of the NASDAQ-listed company’s calls with investors. JetBlue’s corporate secretary and general counsel said analysts do not ask about environmental, social and governance (ESG) issues when they gather every three months to hear the financial report, even though the Long Island City-based carrier is keen to share its achievements.

“We don’t get asked the questions so we bring our message to forums like this,” Hnat told the gathering at Bloomberg world headquarters, calling on attendees to urge their banker friends to probe companies about sustainability

“We have to admit that we emit,” said Hnat, detailing an environmental strategy that involves winglets to reduce fuel burn, an industry-first foray into biofuels and onboard recycling that has resonated especially well with Millennials.  “We are absolutely committed to anticipating and participating into ways we can reduce our footprint.”

At 3M, the $30 billion Minneapolis company known for inventing products as diverse as Post-It notes and Scrub-rite scouring pads, interest in sustainability is growing among asset management firms that favor long-term investments, said Jean Sweeney, chief sustainability officer.

“I think we’re getting more questions,” Sweeney said of her meetings with large investment funds that are taking queues from the Millennial generation’s deep-seated interest in corporate ethics and environmental issues. 

At one recent meeting, an investor had read all 190 pages of 3M’s sustainability report, quipped Sweeney, whose job perks include cutting the ribbon on a West Texas wind farm that supplies green power to the manufacturer.

The U.S. Securities and Exchange Commission issued a concept release regarding ESG disclosure earlier this year. With a presidential election looming and past Congressional opposition to mandatory disclosure, the short-term outlook for U.S. companies will likely continue to be voluntary reporting on sustainability issues.