Staying under the radar: The case of sustainability disclosures in the US

When reading US corporate reports today, one might conclude that sustainability has become less important. References to ESG, net zero, and DEI are disappearing from company financial reports. Yet a closer look suggests something more nuanced is happening. Companies appear to be changing the language they use to discuss sustainability faster than they are changing the underlying topics they disclose. 

This observation motivated our recent research. Over the last several years, sustainability reporting has become increasingly politicized in the United States. Companies now face pressure from multiple directions. Many investors, lenders, customers, and regulators continue to demand information about climate risks, human capital, supply chains, and other sustainability-related issues. At the same time, visible affiliations with ESG initiatives and terminology have become the subject of growing political, legal, and reputational scrutiny. 

The first thing we observe in a large sample of the SEC filings is that firms themselves increasingly acknowledge this changing environment. Beginning in 2024, discussions of anti-ESG scrutiny become substantially more common in 10-K reports. Companies increasingly describe risks arising from political opposition to ESG initiatives, anti-ESG legislation, legal challenges, and reputational concerns associated with sustainability commitments. Prior to 2024, these discussions are practically non-existent. By 2025, they have become a visible part of the disclosure landscape.

What is interesting however is that these disclosures emerge alongside, rather than instead of, more traditional sustainability discussions. Firms continue to discuss pressures from investors, customers, regulators, and other stakeholders who demand sustainability-related information. They also continue to discuss underlying sustainability-related business risks, including climate, workforce, and supply-chain challenges. In other words, sustainability risks did not disappear, and neither did the expectations of stakeholders who care about them. 

This creates a tension we attempt to examine in the paper. Companies appear to be operating in an environment where both pro-ESG and anti-ESG pressures have become more salient. On one side, stakeholders continue to ask for sustainability information and, in many jurisdictions outside the United States, those demands are becoming increasingly formalized through regulation. On the other side, visible association with ESG has itself become costly for some firms. The challenge is no longer simply whether to disclose sustainability information, it is how to do so. Such broader context helps explain the next set of findings.

Beginning in 2024, firms significantly reduce their use of politically charged sustainability terminology. Mentions of terms such as “ESG,” “net zero,” “DEI” and other decline sharply. At the same time, firms increasingly rely on more operational language. Discussions of human capital management, talent development, energy transition, and supply-chain resilience become more common. In many cases, companies appear to be discussing similar issues using language that is less politically charged and more business-oriented. 

The pattern is not limited to a single sustainability topic. We observe similar changes across environmental disclosures, workforce-related disclosures, and discussions of business strategy and operations. Nor is the shift confined to a particular part of the annual report. Instead, it appears to reflect a broader change in how firms communicate about sustainability. 

We see a similar pattern when we look at firms’ affiliations with sustainability reporting frameworks. Historically, references to frameworks such as SASB, TCFD, and the Science Based Targets initiative served as visible signals of sustainability commitment. In recent years, those signals have become less common among US firms. Formal SASB adoption declines after 2023, and references to sustainability frameworks become less frequent. 

What makes this result striking is that it appears to be unique to the United States. Outside the US, SASB adoption continues to grow. While a significant number of US firms move away from formal SASB reporting after 2023, firms elsewhere continue increasing their use of these standards. This divergence suggests that we are not observing a global retreat from sustainability reporting. Rather, the evidence points to a response to the changing political environment in the United States. 

One interpretation of these findings is what we call ESG camouflage. Firms may conclude that the label has become more costly than the information itself. If investors and other stakeholders continue to value information about climate risks, workforce issues, and supply chains, abandoning that information entirely may be costly. Reducing visible ESG branding, however, may be comparatively easy. Firms can therefore lower their exposure to political scrutiny while continuing to provide at least some of the underlying information. 

However, our evidence needs to be interpreted with caution. By 2025, we begin to observe declines not only in labels and framework affiliations, but also in the depth of sustainability disclosure. Firms continue discussing many sustainability-related topics, but the amount of disclosure and the extent of action-oriented discussion begin to weaken. As a result, we cannot yet fully distinguish between ESG camouflage and a broader retrenchment in sustainability reporting. 

The broader implication of our current findings is that sustainability reporting may be changing in ways that are easy to misinterpret. A decline in ESG terminology does not necessarily mean a decline in sustainability-related disclosure. At the same time, changes in language can sometimes be the first signal of deeper changes still unfolding. For investors, regulators, and researchers, focusing only on labels risks missing the more important question: whether the underlying information remains available once the labels themselves have become politically contested.

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Khrystyna Bochkay is an Associate Professor of Accounting at the University of Miami.

Based on a joint work with Thorsten Sellhorn and Katharina Weiß.

This blog is based on a paper presented at the Lisbon Sustainability Week 2026, held at Católica-Lisbon School of Business and Economics and organised with Santander Central Services and ECGI. Visit the event page to explore more conference-related blogs.

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