Sustainability in Retreat: Institutional Pressures and Strategic Nondisclosure

Recent evidence suggests that some firms deliberately undercommunicate their sustainability achievements (‘greenhushing’) while continuing to invest in sustainability, especially in controversy‐prone environments. This study sets out to (i) explore how ESG controversies reshape firms' ESG disclosure strategies by inducing greenhushing, (ii) examine how corporate visibility conditions the persistence of strategic underdisclosure and (iii) assess how a contested institutional environment shapes these responses over time. To do so, a panel of 76 NYSE‐ and NASDAQ‐listed firms over the 2020–2024 period is employed, comprising and greenhushing is computed as the negative gap between ESG disclosure and performance. Results show that greenhushing intensifies over time and that corporate visibility moderates the effect of past ESG controversies. Controversies reinforce underdisclosure among less visible firms, while as visibility increases the association weakens and turns negative among the most visible firms, indicating stronger constraints on sustained underdisclosure. The findings provide evidence of greenhushing as a disclosure‐related strategy, showing that ESG controversies can influence it and that visibility conditions firm's response. For investors and rating providers, low disclosure is not a reliable signal of weak performance in contested environments, because assessment frameworks based on reported information may reward visibility rather than substance; for managers, the viability of reduced communication depends on how intensively the firm is monitored; for regulators, mandatory baseline indicators can limit the information loss that greenhushing produces. The study clarifies when firms respond to ESG shocks with silence rather than transparency and highlights the role of visibility and stakeholder salience in shaping ESG disclosure.