A silent retreat is redefining corporate sustainability. Meanwhile, ESG funds find themselves caught between financial pressure and uncertain environmental policies

The surprising results of the recent US presidential election have not only taken the pollsters by surprise: the landscape of the US – and therefore of the world – is rapidly changing, bringing fossil fuels back into the centre of the debate and reducing the emphasis on environmental policies.

The change coincided with a new trend observed in the communication of many companies, particularly in the energy sector: greenhushing.

This strategy of not openly disclosing environmental sustainability initiatives is a response to increasing political, economic and social pressure, with significant local and global consequences.

What is greenhushing?

This is a phenomenon in which companies, even those engaged in concrete initiatives to reduce their environmental impact, decide not to publicise their progress in this field. This choice stems mainly from the fear of being accused of greenwashing – i.e. declaring environmental commitments without adequate support in concrete actions – or of attracting unwanted criticism and attention from legislators or pressure groups.

In 2023, a report by the organisation The Carbon Trust shows that nearly 25 per cent of corporate directors reported reduced communication about their ESG (Environmental, Social, and Governance) initiatives due to political and social pressures. This phenomenon is particularly prevalent in the United States, where political polarisation has made the climate debate highly divisive, but is likely to spread across the planet.

The roots of greenhushing

During his previous presidential term, Donald Trump had already distinguished himself by a policy strongly geared towards supporting fossil fuels, with initiatives such as the US pulling out of the Paris Climate Agreement and actively supporting fossil fuel producers. Today, as he prepares for his return to the White House, he has reinforced this line, with his promise to dismantle theInflation Reduction Act (IRA), a landmark law passed under the Biden administration that allocates some $370 billion to promote the development of renewable energy and green technologies.

Among the first promised acts of the future administration are the elimination of subsidies to companies investing in renewable energy and the approval of new concessions for drilling in theArctic National Wildlife Refuge, one of the most environmentally controversial areas. This has created an environment in which companies have to balance the need for sustainable innovation with new economic and political priorities.

An emblematic example of this tension is the wind energy sector in the offshore United States. Despite growing demand for renewable energy, projects such as Vineyard Wind in Massachusetts are experiencing significant delays, with some developers citing political instability as a key factor.

Companies in retreat: concrete cases of greenhushing

At this juncture, many large energy companies have decided to take a more discreet approach to their ESG initiatives. ExxonMobil, for example, recently announced a revision of its investment plans in low-emission technologies, with a greater emphasis on traditional oil and gas development projects. This, despite the fact that the company had previously stated ambitious targets for reducing carbon emissions through the use of advanced carbon capture and permanent storage (CCS) technologies.

Similarly, Germany’s Rheinisch-Westfälisches Elektrizitätswerk (RWE), one of Europe’s leading renewable energy companies, chose to scale back its investments in the US. Michael Müller, CFO of RWE, said that regulatory uncertainty and rising procurement costs have made some planned projects, particularly those related to offshore wind, less attractive.

The financial sector was also affected. According to a Morningstar report, ESG funds saw significant outflows in 2023 and 2024, with US investors shifting billions of dollars to more traditional funds, perceived as less risky in the current environment. This trend is prompting many companies to review their communication strategies to avoid losing the support of institutional investors, but also of small investors, who are now less willing to be influenced by sustainability-related factors.

How the financial world is reacting to changes in environmental policies

The change in environmental policies in anticipation of the new White House tenant a has had significant repercussions on the financial markets, particularly on ESG funds. Many of these funds, which invest in companies committed to environmental, social and governance sustainability, have come under pressure.

The year 2024 saw a slowdown in investments in ESG funds in the US, with an overall decline – according to Bloomberg estimates – of about 15 per cent from the previous year.

A telling example is the decision by BlackRock, the world’s largest asset manager, to revise its ESG strategy in response to criticism from both environmentalists and conservative groups. Larry Fink, CEO of BlackRock, stated that ‘although our commitment to sustainability remains intact, political pressures are making the dialogue with investors more complex’.

While the shadows are gathering over the American continent, crossing the oceans we find the old world still illuminated by the Sun: in Europe and Asia, ESG funds continue to show robust growth. The European Investment Bank (EIB) launched a EUR 10 billion programme in 2023 to support companies committed to the ecological transition, while Japan has seen a 20 per cent increase in capital invested in ESG funds, driven by the government’s commitment to achieve carbon neutrality by 2050.

In parallel, even in the new world, some credit institutions are resisting the change of course. Goldman Sachs, for example, announced a plan to reduce fossil fuel-related project financing by 20 per cent by 2030, despite pressure from the US market. The bank stated that ‘global demand for sustainable finance is growing and is an essential component of our long-term strategy’.

The contrast with the global context

As we have seen, while the US seems to be taking a step backwards in ESG policies, the rest of the world is accelerating towards a sustainable energy transition.

The European Union, for example, has confirmed its commitment with initiatives such as the European Green Deal, which aims to reduce net emissions by 55% by 2030.

China – shrouded in the smog produced by massive coal use only a few years ago – today courageously continues to invest in renewable energy, boasting an installed solar capacity exceeding 400 GW in 2023, representing almost 40% of the world total.

This discrepancy between US policies and those of the world’s other major economies risks creating a competitive divide: companies that reduce investment in more sustainable technologies may find themselves at a disadvantage in a global marketplace that is increasingly oriented towards sustainability.

Boomerang effect

But greenhushing is not without risk either. Although it may seem like a prudent corporate communication strategy in the short term, the lack of transparency risks undermining the trust of stakeholders: especially investors and consumers. In a survey conducted by Edelman in 2024, 63% of global consumers said they preferred companies that clearly communicate their environmental commitments, even at the cost of facing criticism from consumers and environmental organisations.

Moreover, greenhushing could slow down the commitment to innovation that will still be needed to overcome the climate challenges we face. The transition to a low-emission economy requires significant investment in research and development, as well as open dialogue between companies, governments and civil society. Reducing communication on these issues risks isolating companies and limiting international collaboration.

Prospects for the future

Despite the difficult context, there are positive signs that indicate a possible turnaround. Companies such as Microsoft and Google continue to pursue ambitious climate targets and invest in innovative renewable technologies. At the same time, the growing consumer interest in sustainable products and services could incentivise manufacturers to become more transparent about their ESG initiatives.

A crucial aspect to consider is the importance of the digital transition in supporting corporate sustainability and combating greenhushing.

Through advanced digital tools, such as artificial intelligence, blockchain and the Internet of Things (IoT), companies can transparently monitor, verify and communicate progress on ESG initiatives.

These tools offer new opportunities to build trust with stakeholders and improve operational efficiency, highlighting the increasingly close link between technological innovation and sustainability strategies.

The future of greenhushing will largely depend on the ability of companies to balance local political pressures with the demands of an increasingly sustainability-oriented global market. For the United States, the challenge will be to balance a new isolationism with adapting to the current political environment through a long-term vision that repositions them as a leader in the global energy transition.