This study investigates how firms strategically adapt to anti-ESG legislation, where institutional pressures for environmental sustainability are lifted. While existing research has primarily focused on firms' responses to positive ESG shifts, little is known about their behaviors under negative policy changes. We argue that firms' responses to anti-ESG legislation are not merely a reversal of pro-ESG behaviors. Instead, due to anticipated policy uncertainty and concerns over potential reputational loss, firms may reduce environmental performance in areas with low but long-term societal impact, such as greenhouse gas (GHG) emissions, while maintaining practices in areas with high but immediate societal impact, such as toxic emissions. We further argue that the relationship between anti-ESG policies and GHG emissions is moderated by firms' prior environmental performance and the extent of pressure from environmental NGOs. Using the staggered enactment of anti-ESG laws across U.S. states from 2021 to 2023, we apply DiD approach to analyse changes in firms' toxic releases and GHG emissions. Our findings offer insights into how firms navigate shifting institutional pressures and balance regulatory signals with long-term strategic considerations.