Greenhushing

We have all come across the term greenwashing. Well, greenhushing can be understood as quite the opposite of greenwashing. Where greenwashing represents a company’s mala fide intentions to showcase fake sustainable actions, greenhushing is about concealing a company’s climate strategies. greenhushing is when companies decide to stay quiet about their sustainability commitments.

As can be seen today, the quantum of company disclosures is much below the ideal mark. If the data of S&P 500 companies are seen, only 15% disclose biodiversity and deforestation and only 12% disclose water risks.

A survey conducted by Swiss carbon finance consultancy South Pole took into account 1200 carbon-intensive companies across 12 countries that had set science-based targets with the intent to achieve climate goals. Surprisingly, one out of four such companies observed complete silence on actions being taken towards such targets. So they were planning to go green as well as dark. They deliberately did not want to publicise their climate game plan. Companies who plan to engage in greenhushing either avoid questions on climate strategies or refuse to answer them.

The CEO of South Pole Renat Heuberger warned that the practice will soon become trendy. He said, “We see that sustainability-minded businesses are increasingly backing up their targets with science-based emissions reduction milestones, which is absolutely the right approach. But if a quarter today isn’t coming forward with details on what makes their target credible, could corporate greenhushing be spreading?

But why would companies do so?

Companies today may prefer to go silent on their sustainability actions because of the fear of a backlash. A recent example that can be looked upon is Texas, wherein certain local entities declared that they would reconsider investment decisions that cater to fossil fuels. Following such a declaration, the government imposed a ban on such local entities prohibiting them from conducting business with many financial firms. Such decisions affect a company’s business because of which many do not prefer to come out in the open with their noble intentions.

Another reason why companies look forward to going silent about their green plans is that going public with environmental goals invites a range of opinions from the public. Many would opine that a company at present is quite behind in the race and it is a long way to go to achieve these goals. People might then lose interest in a company and would prefer to invest in other companies.

Companies also feel that if they publicly announce climate goals, they would come under a lot of scrutiny from authorities as well as climate enthusiasts. And if they fall short of any actions or targets, they would immediately be called out. They fear being termed greenwashers. Many brands like H&M, Shein, Kroger, Revolve and others have been called out in the past because they fell short of their sustainability commitments. They feel that this would not only cause reputational damage but they also will land them in the clutches of lawsuits and penalties.

Some also look at greenhushing as a competitive strategy to outperform peers. They plan to keep on working silently and emerge as winners in the end by not giving competitors a chance to replicate their plans and strategies.

Another instance is when greenhushing happens by default simply because people do not understand the timing of publicising their sustainability goals and achievements. For example, if a company plans to launch sustainable clothes, it just doesn’t know whether it should let the world know about it at the time of launch or when people start buying it or when it becomes a major contributor to the business. Many companies are quite confused as regards the time of communication and end up being victims of greenhushing.

A lot of companies in America are compelled to resort to greenhushing because the subject of ESG is highly politicised in the country. Just because BlackRock started to develop ESG portfolios prominently, the state of Florida began to divest billions of dollars.

Risks Involved

Even though the reasons for greenhushing are understandable and might sound right in many circumstances, it is not the case and the practice should be discouraged. It is just not considered an ideal practice though. If companies go silent on their sustainability actions, a change that the world needs will not be created. As long as the intentions and actions of companies are impact-driven and good, they should not be worried about accusations. They should be confident that “greenwashing truthers” will soon eliminate false accusations and bring them out in the open as impactful businesses. It will further strengthen a company’s reputation.

Also when a company withholds vital information about its ESG strategies, the chances of it being at odds with stakeholders considerably rise. And a company should not ideally disappoint its stakeholders at any cost.

The regulatory landscape around disclosures is getting more and more stringent with each passing day across the globe. And with such developments, disclosures will no longer be a choice but a mandate for all companies. If companies habituate themselves to the practice of greenhushing, they will soon directly land in the pit of penalties and governance issues.

Conclusion

Greenhushing thus is a negative sustainability trend that could become a leading practice for companies. However, on the other side of the spectrum, chances are also that the practice will gain no trend. Only time will dictate if greenhushing as a concept is here to stay or is a short-lived practice that made some news and passed away.

You can learn more about greenhushing through an accredited ESG Expert Certification from Directors’ Institute.