By John Moist

In a time when claims of corporate sustainability fill news slots and earnings calls, new research from Gies College of Business reveals a counterintuitive dynamic: for companies already doing well environmentally, media spotlight on their climate actions may hurt more than it helps. 

"No News About Climate Action is Good News for Low-Polluting Firms," co-authored by Gies Business professor Gautam Pant and published in Production and Operations Management, challenges conventional wisdom about the value of positive publicity. Using machine learning to analyze more than 300,000 business and financial news articles about US public firms from 2005 to 2017, the researchers discovered that increased media attention on climate actions can lead to lower financial performance for low-polluting companies - regardless of whether that coverage was positive or negative.

It's common wisdom that "there's no such thing as bad publicity." But together with co-author Nima Safaei (Max M. Fisher College of Business, The Ohio State University), Pant revealed that increased climate-related media coverage raises operational costs significantly. Firms that experienced media coverage demonstrated an average increase of $25 million in cost of goods sold and $14.3 million in expenses per year. Debt levels also rose, as companies took on additional financing to meet the expectations that media attention creates. 

"Silence can be strategic,” explained Pant. “Our results were really interesting because we found that if you're a pretty clean company, getting lots of climate-related news coverage turns out to hurt your profits."

Pant’s findings line up with larger trends in corporate behavior. In 2024, The Wall Street Journal reported on companies choosing to stay quiet about their green initiatives. The reason behind the effect is also of note. When clean companies find themselves in the media spotlight for climate actions, those firms face pressure to accelerate sustainability initiatives, examine suppliers more thoroughly, or demonstrate increased transparency. Those changes come at a cost. And the long-term benefits, if they materialize, take much longer to show up.

To track the climate media spotlight's beam, Pant and Safaei developed an automated process with a machine learning framework to create what they term a "climate action vocabulary."

"We wanted to completely automate the process so that we have a very objective measure of how firms 'talk' about climate action," Pant said.

The researchers analyzed climate action plans from 365 US cities using techniques called word embeddings to identify the patterns of climate action discourse. The resulting vocabulary is a set of 338 phrases, from "sustainability" to "energy efficiency", each weighted by its relevance to climate action. By applying that to news data, the researchers were able to measure the intensity of climate action coverage for each company.

A Tale of Two Companies

Pant and Safaei uncovered a dynamic that Pant calls "asymmetry" in how different firms are affected by climate action pressures. While low-polluting companies suffer financially from the climate-related media spotlight, high-polluting firms actually benefit from the attention.

"If you are a high-polluting firm, that spotlight is not necessarily bad," explained Pant. "You have room to improve, and the spotlight can move you in the right direction. You can improve your efficiency and try to repair your reputation. All those costs are helpful for you. It can actually lead to a better financial outcome."

High-polluting firms start from a lower reputation, meaning that there's more room to grow up than down. They have, for example, more opportunities for cost-effective changes. The operational changes they make in response to scrutiny can lead to gains in cost savings and reductions in regulatory overhead. For these firms, the spotlight is a kind of catalyst for change that can lead to both environmental and financial returns.

The research also found that the impact of attention varies based on other factors. Business-to-consumer companies, which face more direct public exposure, likewise face higher risks from climate media attention than business-to-business firms. Firms with a larger profile, which are more visible in structures like the S&P 500, respond more negatively to the climate media spotlight, likely due to the higher costs and risks that come along with managing public relations.

Companies in capital-intensive durable goods sectors show less of an adverse reaction, perhaps due to longer development cycles and fixed investments that make rapid adjustments tricky. The study also found that companies with higher levels of greenwashing, or those receiving more positive climate action coverage than their actual performance would merit, experienced an even sharper negative financial reaction to the spotlight, suggesting that the gap between a firm's green claims and its green reality can raise the costs of scrutiny. That finding connects to other Gies Business research from economist Qiping Xu examining the gap between firms' environmental appearances and their actual impact.

The Problem of Attention

Pant sees stakes in the research beyond implications for individual firms.

"Our society has limited attention," said Pant. "If media spends time on low-polluting firms - or, I'll say it, 'feel good' climate stories - it might distract from high-polluting firms or sectors where real change matters more. That is, I think, the broader outcome of this."

The concern isn't that companies shouldn't take climate actions, or that transparency is harmful. Rather, it's about the allocation of an increasingly scarce resource: attention. When media focuses extensively on companies that are already environmentally clean - for example, with praise for a certified B Corp introducing a revised line of recycled textiles - it may divert attention from sectors where progress would have the greatest impact.

"You're putting your attention on a company that doesn't pollute at all, spending all your time there, increasing their costs, while massive amounts of pollution are taking place because of these dirty industries and dirty companies where that attention could actually be helpful," Pant cautioned. "It could improve their efficiency and benefit society in general."

That dynamic has led to what some commentators and scholars call "greenhushing," or deliberately choosing to keep the lid on climate actions to avoid the scrutiny those actions might bring. As climate action pressures from stakeholders intensify, firms face complex choices about how publicly they should communicate their environmental efforts.

"It's a reminder for everybody - people consuming media, people producing media, firms trying to attract attention through media," said Pant. "It's a reminder for all of them."

In an already saturated media environment, those dynamics become increasingly important - both for the invested firms and for directing our collective attention where it matters the most.