No. 244: Staying under the radar: The case of sustainability disclosures in the US

We examine how US firms adjust sustainability reporting in response to the recent anti-ESG turn, testing whether firms engage in ESG camouflage: reducing visible ESG markers while preserving disclosure substance, or instead retrench more broadly. Using 10-K reports from 2020-2025 and data on firms’ adoption of SASB standards, we investigate changes across different dimensions of sustainability disclosure and document four key patterns. First, beginning in 2024, firms reduce the use of politically salient ESG terminology (e.g., “ESG,” “net zero,” “DEI”) and shift toward more neutral, operationally framed language. Second, they reduce visible affiliation with sustainability frameworks, reflected in fewer references to named standards and related concepts (e.g., SBTi, SASB, TCFD) and a decline in formal SASB adoption among US firms relative to firms outside the US. Third, broader measures of disclosure content change less sharply, with topic coverage and industry-specific terminology remaining relatively stable. Fourth, by 2025, disclosure substance, as proxied by the length of sustainability-related text and mentions of company actions in that text, weakens as well. Taken together, the patterns suggest firms initially adjust the appearance of sustainability reporting more strongly than its substance, consistent with ESG camouflage. However, by 2025, substance weakens as well, and we cannot (yet) fully distinguish camouflage from a broader retrenchment in disclosure.