Is it easier being green? U.S. firms are retreating on DEI, holding steady on environment

Corporations are quick to adjust their disclosures when political or regulatory shifts signal changing expectations from investors, regulators and other stakeholders. And the early evidence shows that firms are rapidly retreating on DEI in the current political climate in the U.S., but holding steady on the environment.

A new White Paper from the Institute for Sustainable Finance presents findings from analysing the language of mandatory annual corporate filings (Securities and Exchange Commission 10-Ks) in the United States before and after the re-election of U.S. President Donald Trump. Shifts in priorities of the new administration — including efforts to scale back ESG frameworks, limit DEI programming, and reduce environmental incentives — have created a regulatory atmosphere in which firms are recalibrating how they present these issues in mandatory disclosures.

The results of the research reveal a stark decline in DEI-related disclosure language following the 2024 election, with average DEI keyword mentions across S&P 1500 firms’ filings falling by nearly 25 percent between 2024 and 2025. In contrast, climate- and environment-related terminology remained largely stable over the same period, registering only a small and statistically insignificant decrease.

Read and download “Sentiment and Sustainability: How the language of U.S. corporate filings reveals divergent paths for management priorities on DEI and Environment.”

It is authored by:

• Tanja Artiga Gonzalez, PhD, Associate Professor of Finance at VU University Amsterdam, the Netherlands. Fellow of the St. Gallen Collegium, University of St. Gallen, Switzerland
• Paul Calluzzo, PhD Associate Professor & Toller Family Fellow of Finance, Smith School of Business, Queens’s University
• Bhargav Gopal, PhD, Assistant Professor, Smith School of Business

“This is such a timely paper. DEI disclosures are the first casualty in current culture wars, but it is heartening to see how corporations are still sticking to their knitting for climate,” said ISF Director of Research, Yrjö Koskinen. “Rumours of climate finance death are highly exaggerated.”

“The resilience of climate language may reflect investor expectations and the perceived materiality of climate risk across industries,” said Paul Calluzzo. “By contrast, DEI terminology appears more vulnerable to policy and political signalling.”

“Taken together, these findings suggest that disclosure of DEI initiatives is perceived by firms as discretionary language — easily scaled back when political and regulatory winds shift,” said Tanja Artiga Gonzalez, “whereas climate-related terminology has become more entrenched in baseline disclosure practice.”

“Future research should track whether the decline in DEI references represents a temporary reaction to the current political environment or a more durable realignment of corporate disclosure practices,” said Bhargav Gopal. “This study could also be expanded to include more explanatory drivers, such as incorporating changes to state-level policy and other potentially confounding factors that may affect disclosure behaviour.”

These findings suggest that usage of DEI-themed language in 10-K filings is more sensitive and responsive to a changing regulatory environment and that firms exhibit a readiness to recalibrate disclosure strategies in response to perceived changes in regulatory enforcement priorities, even in the absence of explicit new mandates. The decline is observed across industries, firm sizes, and both Republican (red) and Democratic (blue) states, though it is most pronounced among larger firms.