It’s likely you have heard of the term Greenwashing, but for those of you that haven’t, it’s the term used when businesses present themselves as more sustainable than they actually are. It is the act of sharing misleading information, to appear environmentally conscious.
It’s a rather common expression used when researching companies.
But have you heard of Greenhushing?
Greenhushing: The New Sustainability Silence
Still a relatively new term, Greenhushing refers to the deliberate attempt by companies to withhold their ESG information, for fear of backlash from stakeholders or investors. It is not entirely dishonest, but can cause serious discrepancies when analysing corporate sustainability targets, due to the lack of transparency.
Sustainability is no longer a niche concern. Consumers are increasingly eco-conscious, and investors are pouring money into companies with strong Environmental, Social, and Governance (ESG) practices. However, for many companies, the need to advertise ESG progress and improvement has become synonymous with the fear of greenwashing allegations.
This fear, although unfortunate, is valid. As seen after the Cop26 climate summit in Glasgow, where companies widely shared their sustainability efforts, companies were quickly humbled by the allegations that their targets were both unsubstantiated and misleading.
As such, Greenwashing has become a dirty word, with multiple companies facing lawsuits and public scandals for false claims. Fear of being accused of Greenwashing has led to the growing trend of Greenhushing, despite companies’ good intentions.
Greenwashing vs. Greenhushing: Two Sides of the Same Coin?
Greenwashing and greenhushing might seem like opposites, but they share a common root cause: a lack of transparency. Greenwashing deceives with false claims, while greenhushing hides potentially positive efforts. Both hinder progress towards true sustainability.
An example of Greenhushing would be a company quietly reducing its carbon footprint, through reducing energy use, using sustainable suppliers, or adopting eco-design principles that create products which are both durable and energy efficient. However, they may avoid mentioning it in their reports, due to concerns about greenwashing accusations. This lack of transparency makes it difficult for consumers and investors to make informed decisions.
Of course, this creates some difficulty in the SRI space, as we depend largely on the data reported by companies. Although we understand the tricky nature of this topic, as far too many companies tend to over-sell and emphasise their sustainable efforts, this does create a reputational issue. If we can’t find evidence of sustainable goals being set, and associated measures being implemented, then a company’s rating may be lower than it should be, which could lead to them missing out on deserved financial flows.
So, how do we solve this?
Moving Forward: Breaking the Silence on Sustainability
Both companies and researchers need to address greenhushing – which starts with creating awareness.
Additionally, companies should prioritise transparency, clearly communicating their sustainability efforts, even if they're not perfect. This can involve:
- Publishing detailed ESG reports
- Setting clear and measurable sustainability goals
- Engaging with stakeholders on sustainability progress
Company ratings produced by our researchers here at Ethical Screening, depend on information. Even if this doesn’t show a company to be perfect (after all, what company is?), it will help us to form a better picture of a company’s efforts, when compared to no information at all.
Ethical Screening prides itself on the use of human intelligence. We utilise our highly educated and experienced group of research professionals to provide our clients with insights into the outbound materiality of company activities, and what these companies do to mitigate these risks and impacts.
By working together, companies, researchers, and investors, can create a more transparent and accountable system for sustainable investing, which will inevitably benefit both the environmental and financial markets.