Key Impact Points:
- Companies are reducing public mentions of ESG and sustainability but maintaining their focus in financial disclosures and reports.
- Political and legal pressures, including ESG backlash, have led businesses to shift terminology and avoid overt sustainability marketing.
- Despite challenges, 84% of surveyed companies highlight investor support as critical for implementing sustainability strategies.
Sustainability Talk Shifts Behind the Scenes
Companies are scaling back public discussions about sustainability while maintaining a steady focus on the topic in financial disclosures. An analysis of corporate data shows that while mentions of ESG in earnings calls have dropped, they remain prominent in reports and filings.
“We haven’t seen any real diminution in the amount or quality of reporting on sustainability,” said Julie Gorte, senior vice president for sustainable investing at Impax Asset Management. “What you don’t see is the companies coming out and having a big marketing splash about it.”
In fact, around 97% of ESG mentions now occur in financial contexts, according to data analyzed through Factiva. Corporate announcements and board meeting transcripts account for only a small portion.
Pressure Drives ‘Greenhushing’
The trend, dubbed “greenhushing,” reflects growing scrutiny and backlash against ESG initiatives. Legislative actions in U.S. states, accusations of antitrust violations, and class-action lawsuits over greenwashing claims have pressured companies to avoid high-profile sustainability claims.
“Everyone wants to keep their head below the lip of the fox hole politically and not be a target,” Gorte noted.
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A September 2023 survey by the Conference Board found that nearly half of large companies had faced ESG backlash, with 61% expecting it to increase. Many have adjusted their language, avoiding terms like ESG and opting for phrases like “clean air,” “clean water,” or “economic opportunity.”
“About half of companies who experienced the backlash have adjusted the terminology. They don’t use ESG. They might refer to sustainability instead,” said Andrew Jones, senior researcher at the Conference Board.
Sustainability Still a Long-Term Priority
Despite the muted rhetoric, companies recognize the importance of sustainability for long-term value creation. A Morgan Stanley survey found that 84% of companies rely on investor support to achieve their sustainability goals, though access to capital remains a significant hurdle.
Additionally, 74% of corporate climate commitments announced in 2021 have been fully or partially realized, according to an analysis published in the Harvard Business Review.
Gorte emphasized the importance of looking beyond marketing materials for tangible evidence of sustainability efforts. “There’s always some lamppost you can look under to say, alright, can I pin this down?” she said.
This shift suggests that companies are evolving their approach to sustainability, focusing on substance over slogans in response to heightened scrutiny.
Related Article: 58% of Top U.S. Companies Greenhushing ESG Progress Despite $30T Asset Growth
