Capital
How To Do ESG: A Public Builder's Field Guide To Stakeholder Equity
More public homebuilders report ESG progress in a bid to balance earnings with stakeholder equity. Here's which publics do what on the diversity, inclusion, equity, and sustainability reporting front.
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A news note this past week may possibly have sidled unnoticed among strategists at American homebuilding's 20 publicly-traded companies, but shouldn't be ignored.
Those strategists just got through reporting gangbusters quarterly and annual earnings for the most part, a momentary thrill of victory. Those same strategists, each in their own way, must navigate a sharp spasm of human, building materials, and land supply chain constraint if they have any hope of matching those same performance results for even another fiscal quarter. The shot at the back-flips of joy this same time in 2022 is anything but certain.
Still, subtly camouflaged and slightly offset to those obviously-hotter, on-the-radar matters, this story caught our attention.
Wall Street Journal [pay-gated] staffers Dawn Lim and Geoffrey Rowgow report:
BlackRock at Odds With Warren Buffett’s Berkshire Hathaway Over Disclosures
When the biggest asset manager in the universe and the same universe's rockstar investment strategist sneeze, public companies writ large – like the 20 enterprises in homebuilding that account for 45% or more of single-family completions in the United States right now – can get a cold.
And, mind you, this is not a "good-guys versus bad guys" story, as much as the scope of polarized positions, oppositional views, and diverging fundamental business assumptions appear to make it so. It's a flashpoint for stakeholder capitalism's potential to shift strategic and management focus to an accountability agenda beyond quarterly earnings performance.
It's not about being "woke." It's about being enduringly high-performing on all the important value-creation fronts.
Here's the bone of contention:
BlackRock Inc. BLK 1.89% voted for two shareholder proposals that would require Warren Buffett’s Berkshire Hathaway Inc. BRK.B 2.46% to publish disclosures on how it manages climate risk and diversity efforts across its many businesses. Berkshire’s two shareholder-led proposals didn’t pass, but around a quarter of votes cast were in favor of the two proposals, Berkshire said during its annual meeting Saturday.
BlackRock’s vote highlights the growing tension between asset managers who are calling for companies to further emphasize ESG issues and executives who are pushing back. Mr. Buffett has defended the company’s current policies.
“The company is not adapting to a world where environmental, social, governance (ESG) considerations are becoming much more material to performance,” BlackRock wrote in a bulletin about its Berkshire decision.
As we turn focus to our cohort of public homebuilders, where peers run a full gamut – from a full-throated embrace of ESG reporting commitment to a middling pass at such declarations to no clear, specific statement at all – the moment calls for discovery.
Fueling that discovery – in the view of The Builder's Daily – are four strong motivators that, taken from a perspective of a future vantage point back to the present, should be cause for serious consideration.
- Global institutional investment players, led by the likes of Blackstone ceo Larry Fink, have unambiguously stated that its core asset management strategies will increasingly favor firms that both progress and report on that progress on environment, social, and governance measurables.
