In the past few months, and even before the inauguration of President Trump, many US firms—including leading financial services companies—have abandoned or watered down some of the environmental and social commitments they made just a few years ago, including a focus on decarbonization and their active support for diversity, equity, and inclusion (DEI) initiatives.

This backsliding has inevitably sparked criticism of the companies and the credibility of their initial embrace of the now-jettisoned causes. As Raghuram Rajan, a professor at the University of Chicago’s Booth School of Business, asked in a recent article in the Financial Times, were the commitments really just “performative political theater” all along?

This post isn’t about whether these institutions were right or wrong to make the decisions they did, but rather about the lessons for thought leadership and communications more broadly, at a time when values, ideas, and regulations are changing.

The repercussions for DEI are now just starting to be felt, but commitments to sustainability were already losing ground. That’s particularly the case in financial services, where leading institutions publicly committed to an embrace of net-zero emissions as recently as 2020 and 2021, only to eventually pull back from it.

One of the most striking examples of this involves BlackRock, the world’s largest money manager, with more than $11 trillion in assets under management. BlackRock’s founder, CEO, and chairman, Larry Fink, caused a stir in the industry in 2021 by making a strong case for the impact of climate change on investing. In his annual letter to CEOs that year, he said, “We know that climate risk is investment risk. But we also believe the climate transition presents a historic investment opportunity.” He issued a call to action, asking companies “to disclose a plan for how their business model will be compatible with a net zero economy.”

Fast-forward to today, and BlackRock is singing a very different tune. It continues to say that it considers climate change in its investment decisions. But facing a backlash from investors and regulators in several US states, Fink in his 2024 letter talked in muted terms only about “energy pragmatism.” BlackRock’s support for shareholder proposals on environmental and social issues at annual meetings dropped from 47% support in 2021 to just 4% in 2024. And in January of this year, BlackRock told investors that it is pulling out of the Net Zero Asset Manager initiative, a global group of asset managers set up in 2020 who publicly committed to a range of sustainability commitments, including prioritizing investments in companies that are working to reduce their emissions.

Many other financial services firms have adopted a similar playbook. Before the inauguration, six of the largest US banks—JPMorgan, Citigroup, Bank of America, Morgan Stanley, Wells Fargo, and Goldman Sachs—left the Net-Zero Banking Alliance, a sustainability group for banks. And in the financial world, ESG (environmental, social, and governance) investing—all the rage just two years ago—has become toxic in the US and has been muted elsewhere, including in Europe, where the European Commission recently watered down new sustainability reporting requirements for thousands of companies.

From a communications perspective, this shifting terrain can be a nightmare, because taking a strong position and then flip-flopping on it can not only hurt employee and client morale but also poison a company’s image. How should firms handle the communications conundrum that results? Here are five takeaways from the backsliding happening today.

First, bold social commitments by companies can be powerful, but they are inherently risky. The US economist Milton Friedman famously wrote in 1970 that “the social responsibility of business is to increase its profits.” His point was that companies should focus solely on profits and not bother with the other stuff. Since then, however, companies everywhere have been under growing pressure—including by regulators—to play a bigger role in social issues, and many have done so. Yet the history of corporate social responsibility includes successes and failures. Trends come and go, and company leadership also changes. Making a bold commitment thus needs to be a top-level decision with substantial buy-in from the board and other stakeholders, not just a round of buzzword bingo. And once a commitment is made, companies should stick to it even if the prevailing winds change, unless circumstances have fundamentally shifted (see takeaway 4).

Second, communications should follow strategy—and not the other way around. Following a trend for its own sake, or trying to be something other than what your business actually is, can backfire. One example of this involved British oil company BP, which spent $200 million on campaigns to tout its environmental credentials by rebranding itself as “Beyond Petroleum”—only to be blown out of the water by its 2010 Deepwater Horizon oil spill. The upshot: It’s asking for trouble to speak loudly about the importance of sustainability and set goals if you don’t have the ability or concrete plans to meet them, including incentives for managers and employees to ensure that targets are met. The same holds for DEI initiatives: Studies have shown that big sums US companies pledged to Black communities after the 2020 murder of George Floyd never materialized.

Third, data and research can support commitments by making them stronger and more durable. This is where thought leadership comes in: Offering facts and examples that underscore the importance of the commitments you make as a company can enhance credibility. For DEI, detailed examples showing that more-diverse companies perform better than others provide a backbone at a time when backbones are needed. For sustainability investing, evidence about the utility and continuing growth of “green” bonds and other sustainability-linked assets can be powerful when you’re under attack. Avoiding extravagant claims and loaded language in published research, and letting the data do the talking, is the best way forward. Sometimes that can feel less than compelling: For example, a recent, soberly written Morningstar report on ESG investing found that funds with a more environmental focus performed just as well as others. Not a terribly sexy finding, but one that provides credibility to fund managers looking to remain focused on environmentally friendly investing.

Fourth, circumstances can and do sometimes change. Mitigating factors can help explain a company’s change of heart. For example, regulations might change, as they have for DEI—a result of President Trump’s executive orders. What’s important but all too often lacking (see takeaway 5) is a smart communications strategy to convey the rationale for the change. Sustainable investing, for example, has been hampered by a lack of reliable and generally accepted metrics that can track progress on ESG initiatives. Attorneys general in Michigan and 10 other US states have alleged that the efforts of BlackRock and other money managers, including Vanguard and State Street, to encourage coal companies to lower carbon emissions amounted to anticompetitive business practices. Money managers also now have legal reasons not to support shareholder activist proposals at annual meetings, following recent guidance by the Securities and Exchange Commission.

Fifth, if you do change positions, don’t run and hide—own it. Conspicuously absent in companies’ communications related to switching positions on both DEI and sustainability has been honest messaging about the “why” and “so what” of the change. A company’s credibility depends on being open and clear. That won’t spare it from criticism, but it might blunt some of the impact. If legal or political considerations force a change of position, come out publicly and say so—but also say where that leaves the previous policy. Do you still adhere to the principles, if no longer the way of implementing them? Is it only the language that has changed? BlackRock, for example, could help burnish its reputation with a statement about where it now stands on climate investment. But for now, it seems to be shying away from that: Its announcement about leaving the Net Zero Asset Manager initiative wasn’t made publicly or by Larry Fink but communicated privately to institutional investors by a vice chairman. Yet BlackRock still has a tale to tell about how it is adjusting to the political reality in the US and what that means for its continued belief in climate as a factor in investments. It’s a story well worth telling.

In short, credibility is priceless, and good communications can help ensure companies retain their credibility even when they change course. Adopting trends that are inherently political can backfire, and CEOs and boards have every reason to think twice before doing so. But once they have staked out their territory, they need to be highly transparent if they ever cede it.