Market Data 
By Ross Kerber
(Reuters) – Many U.S. companies have stepped up reporting on environmental and social matters in recent years even with sustained pressure from conservative politicians, data reviewed by Reuters shows.
The trend shows the importance investors and regulators now place on environmental, social and governance (ESG) issues, analysts said, amid rapid global warming and shifting workforce demographics. Some political conservatives call the attention misplaced or worry the disclosures could give activists leverage to force companies to make unnecessary changes.
“Most ESG problems are business problems. I’m an accounting professor. I can tell you that if you pick any company’s 10K and look at the risk factors, they are full of E and S problems,” said Shiva Rajgopol, who teaches at Columbia Business School.
The data contrasts with a some high-profile cases where companies have dialed back ESG efforts such as working less with industry climate efforts and cooperating less with an LGBTQ+ advocacy group.
Many executives may be taking a wait-and-see approach until national elections on Nov. 5 set a new balance of power in Washington, D.C., starting next year, Rajgopol said.
“If you’re a company and something is getting you into trouble with some constituents, it’s simplest to back away from doing things that seem risky for now and just stay put and wait until January and then reassess,” he said
Which party holds the White House and Congress could energize or squash efforts to restrict ESG investing, a cause that has lagged to date.
BE COUNTED
The share of companies making workforce data by race and gender public rose to 82.6% as of Sept. 1 from 5.3% in 2019, according to DiversIQ, which tracks diversity data for investors, consulting firms and corporate clients.
The number of U.S. companies sharing environmental data, meanwhile, has also grown, with 85% of large-cap U.S. companies disclosing details of their greenhouse gas emissions at the end of last year, up from 54% disclosing in 2019, according to ESG investment advisor HIP Investor.
Obtaining public disclosures on ESG data has been a focus of pro-ESG activist investors including Democratic public pension officials. The disclosure uptick also shows boards responding to new rules like the European Union’s Corporate Sustainability Reporting Directive, said Ken Rivlin, partner at law firm A&O Shearman.
Many companies also made public commitments around climate, pay equity and workforce, details they cannot easily shift with the latest news cycle.
“Establishing corporate policy in reaction to the latest pro- or anti-ESG news story is not a recipe for success,” Rivlin said.
KEEP THE REPORTS COMING
Various conservative politicians and social media figures have targeted companies’ diversity efforts including their links to LGBTQ+ advocacy group Human Rights Campaign, which surveys companies on issues including same-sex partner benefits and transgender healthcare.
In August, home improvement retailer Lowe’s (NYSE:) said it would no longer participate in the survey and restructured diversity efforts. A Lowe’s representative said at the time it would continue to report workforce diversity and pay-gap data that investors had asked for.
A Ford (NYSE:) representative said via email that “we will continue to disclose our human capital management and DEI data” in an annual sustainability report, but did not provide further details.
Despite the departures, more than 1,400 companies participated in this year’s survey, to be released in January, up slightly from 1,384 in the most recent survey issued in November 2023, HRC said.
Companies “know that this is what their workforce and consumers demand,” said HRC President Kelley Robinson.
Jeremy Tedesco, senior counsel for the Alliance Defending Freedom, which calls itself a Christian law firm and opposes many corporate ESG efforts, said pullbacks like those by Lowe’s and Ford stand in contrast to several years ago when many companies rushed to align with climate and social-justice activists.
Successful lawsuits targeting corporate diversity policies based on the 2023 U.S. Supreme Court ruling on college admissions could accelerate corporate changes, Tedesco said. “Unfortunately companies went too far and there’s a lot of course-correction,” he said.
ON THE BACK FOOT
Many corporate climate disclosures stem from pressure from top fund firms backing shareholder resolutions. Since around 2021, however, investors have cut their support including State Street (NYSE:)’s asset-management arm.
Like other investors, State Street said companies have already made significant changes. “Disclosure has dramatically improved, especially related to E and S issues over the past five years,” said Ben Colton, State Street’s stewardship chief. “I’d imagine we’ll continue to see this kind of disclosure,” he said.
