New research reveals a hidden trade-off in corporate sustainability: companies that spend more on political lobbying tend to disclose less about their environmental and social performance – raising fresh concerns about the credibility of ESG reporting. “Firms disclose less while investing more in political influence. Understanding this relationship is crucial if we want ESG information to remain credible, useful, and relevant for investors, policymakers, and the public,” explains lead author and CMCC scientist Simone Taddeo. 

A new study, When money talks, ESG falls silent: Evidence from US lobbying and disclosure, published in the Journal of Cleaner Production, examines whether corporate political spending is linked to lower transparency in ESG (environmental, social and governance) disclosure among S&P 500 companies. Combining lobbying expenditure data with ESG disclosure scores across hundreds of large US firms, the authors find a clear and statistically significant pattern: the more a company spends on lobbying, the less it tends to reveal about its environmental and social practices.

The difference isn’t dramatic in absolute numbers — a firm spending an extra million dollars on lobbying scores lower on sustainability transparency — a pattern that shows up consistently across hundreds of large US companies. The clearest signal is on environmental disclosure specifically, where the effect is about ten times stronger than the overall score.

“The paper suggests that political influence and public sustainability disclosure can act as substitutes: some companies appear to invest more in lobbying while saying less about their environmental and social disclosure practices,” explains Taddeo.

The paper’s core innovation lies in connecting two research fields that have until now developed largely in parallel: corporate political activity and ESG transparency. Previous studies have examined lobbying and ESG reporting as separate phenomena, without asking whether one might systematically shape the other. This study shows that they can be linked through what the authors call a “substitutive logic” — firms may use political influence as a way to compensate for, or shield, incomplete sustainability disclosure.

This finding is particularly timely given the intensifying global debate around ESG standards, the growing use of sustainability reports by investors and regulators, and rising concerns about greenhushing — the deliberate choice by companies to stay silent about environmental commitments in order to avoid scrutiny.

Why it matters for investors and policymakers

The implications extend well beyond academic interest. ESG scores are increasingly used by institutional investors to assess corporate risk and align portfolios with sustainability goals. If lobbying activity systematically depresses disclosure quality — especially on environmental dimensions — then ESG data may be less reliable than assumed for precisely those companies most active in shaping the regulatory environment around them.

“This study was important to me because it helps shed light on a less visible aspect of corporate sustainability: the possibility that firms disclose less while investing more in political influence. Understanding this relationship is crucial if we want ESG information to remain credible, useful, and relevant for investors, policymakers, and the public,” says Taddeo.

The research suggests that regulators and standard-setters developing mandatory disclosure frameworks — including those currently advancing in the EU and the US — may need to account for corporate political spending as a factor that influences both the incentives and the quality of sustainability reporting.

CMCC contributed to this research through its interdisciplinary expertise in climate economics, environmental sustainability, and policy analysis.

For more information:

Taddeo, S. et al. (2025). When money talks, ESG falls silent: Evidence from US lobbying and disclosure. Journal of Cleaner Production: https://doi.org/10.1016/j.jclepro.2025.146971