As promotion of ESG, diversity and sustainability initiatives declines in response to political scrutiny and public backlash, the result has been a silencing known as ‘greenhushing’ – an absence of public communication about corporate sustainability activities.
The increasing lack of discourse and disclosure has led many investors to wonder how they can verify whether ESG work is still happening if companies stop talking about their progress.
The good news is, silence doesn’t equal inaction.
“A lot of the greenhushing we’re seeing is driven by changing regulations in Canada and Europe aimed at companies misrepresenting ESG and sustainability claims,” says Stephanie Tsui, Chief Sustainability Officer at Genus. “Right now, they don’t want to get in trouble, because it comes with both financial and reputational risks.”
Fortunately, most organizations haven’t actually abandoned their ESG or DEI commitments – they’re simply keeping a lower profile. According to the 2025 U.S. Business Sustainability Landscape Outlook, which surveyed 400 corporate executives across industries, one-third of respondents reported reducing public communication of ESG activities, while 79% continue to pursue sustainability objectives.
For impact investors, this suggests companies may still be advancing sustainability objectives, even if less visibly. But the decline in disclosure makes it harder to assess progress and verify genuine impact, which raises the question – how can sustainable and impact investors navigate a quieter ESG landscape?
Here’s a closer look at what’s driving greenhushing – and how investors can uncover the information they need to invest confidently in this quieter environment.
Why companies are going quiet about ESG
Several factors are driving the current environment of greenhushing and the lack of communication around corporate ESG initiatives:
- Regulatory risk: In Canada, Bill C-59 introduced new anti-greenwashing provisions under the Competition Act, making it easier to penalize companies for overstating or misrepresenting their ESG or sustainability initiatives. And the consequences can be severe: Canadian regulators recently issued large penalties for firms found to have overstated ESG claims. Europe is also raising the bar on ESG disclosures, with rules like the Sustainable Finance Disclosure Regulation and the Corporate Sustainability Reporting Directive. Both require companies to provide detailed and verifiable sustainability data.
- Political backlash: In the U.S., ESG and sustainability initiatives have become politically charged, with growing backlash among law and policymakers. This has caused companies to tread more carefully, weighing the benefits of speaking out against the potential for political or public criticism.
Despite these influences, impact investing continues to grow worldwide. A recent Morgan Stanley report shows that interest in sustainable investing remains high, with 88% of respondents reporting interest in sustainable investing, and more than half planning to increase their sustainable investment allocations in the next year.
How to invest confidently in spite of greenhushing
Companies now are focused on clarifying how the new regulations apply to them – and ensuring their claims can withstand scrutiny. “They’re likely talking with their legal counsel to understand the new regulations. Then they will decide their next course of action,” Tsui says, adding that the step-back is probably only temporary. “Those who are genuine about ESG and sustainability will emerge with confident factual claims, and they will stand out,” she says.
Tsui advises that during this transition phase, it’s a good idea to do your homework before investing. “The greenwashing crackdown is a good thing,” she says. “Real leaders will emerge and set benchmarks for best practices for others to follow. Look for companies that are still standing by their claims and message,” she adds. This includes researching factors such as:
- Revenue sources: Look beyond stated climate targets and pledges. Are a company’s revenues substantially tied to sustainable activities? Are their stewardship or lobbying activities consistent with their targets or pledges? Are they investing in new solutions or technologies that enable better environmental and social outcomes?
- Business fundamentals: Assess whether sustainability is built into day-to-day operations rather than treated as a side project.
- Labour rights and equity: How does the company treat its employees? Fair wages, diversity and equity practices are strong indicators of social responsibility.
- Community engagement: Companies making a genuine impact often invest in and support the communities where they operate.
For investors, getting this information will require going deeper than annual reports. Working with an advisor who specializes in ESG analysis and due diligence can reveal whether a company is truly walking the talk. “It’s about more than published emissions targets,” Tsui says. “We look through a vast array of attributes and factors related to their products and services, and their operation as a firm including their policies and practices, how they are really treating their employees, and how they are engaging their communities – are they making a tangible impact? If they’re not walking the talk, it will be caught by our screens and analysis. We focus on reality more than disclosure because a company can make a lot of claims, but are they actually doing it?”
At the end of the day, the challenges of climate change and social justice aren’t going away. While disclosure trends may ebb and flow, companies with authentic commitments will stand out. “This is the best time to identify genuine players,” Tsui says. “And it’s a good impetus to push the industry to healthier and more transparent standards.”
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This document is provided for general information purposes only and is not a substitute for professional advice. It does not constitute investment, legal, accounting, tax, or other advice or recommendations, nor should it be relied upon as the basis for any decision. Readers should seek specific professional guidance before making financial or investment decisions. Certain information herein is based on third-party sources believed to be reliable, but its accuracy and completeness are not guaranteed. Past performance is not a guarantee of future results.
References:
Directory, S. (2025, September 27). ESG faces backlash: fund outflows, greenwashing, and political pressure → ESG. News → Sustainability Directory. https://news.sustainability-directory.com/esg/esg-faces-backlash-fund-outflows-greenwashing-and-political-pressure/
- The 2025 US Business Sustainability Landscape Outlook. (n.d.). The 2025 US Business Sustainability Landscape Outlook. https://resources.ecovadis.com/whitepapers/the-2025-us-business-sustainability-landscape-outlook
- Commerce, C. C. O. (2025, February 26). A failure of process and policy: Canada’s Greenwashing Amendment to the Competition Act in Bill C-59 – Canadian Chamber of Commerce. Canadian Chamber of Commerce. https://chamber.ca/greenwashing-bill-c59/
- OSC announces allegations against Purpose Investments Inc. and Mr. Som Seif. (2025, September 15). OSC. https://www.osc.ca/en/news-events/news/osc-announces-allegations-against-purpose-investments-inc-and-mr-som-seif
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- London Business School. (2025, March 25). What the ESG backlash reveals—and what comes next. Forbes. https://www.forbes.com/sites/lbsbusinessstrategyreview/2025/03/25/what-the-esg-backlash-reveals-and-what-comes-next/
- MORGAN STANLEY INSTITUTE FOR SUSTAINABLE INVESTING. (2025). Sustainable signals.
https://www.morganstanley.com/content/dam/msdotcom/en/assets/pdfs/
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