As climate change moves up the corporate risk register, a worrying new phenomenon called “greenhushing” is taking root in business. This phrase is used to describe companies downplaying or completely shying away from talking about their climate commitments. University of Portsmouth and University of Bath researchers recently presented a fascinating observation. As they dug deeper, they discovered that hotels and hospitality companies were increasingly fearful or unwilling to talk about their sustainability initiatives.
The shift toward greenhushing is spurred by multiple forces. Increased pressure from stakeholders as well as recent policy shifts toward environmentalism contribute heavily. Joshua Hilton, a professor in the field, noted that backlash against Environmental Social and Governance (ESG) policies in the United States is driving this trend. He pointed out that “there’s been some backlash to ESG and that’s certainly driving what we’re seeing in the US.”
Nadia Kähkönen of South Pole emphasized a key hurdle for businesses. They put themselves at legal risk if they either don’t do enough to communicate their sustainability efforts, or they over-promise and mislead consumers. She stated, “They navigate a complex landscape where they can be sued for saying too little – and sued for saying too much.” This overly cautious approach can result in a lack of transparency which ultimately erodes the trust that businesses, and their stakeholders, value so much.
Yet, as we found in a recent South Pole report, almost half of all companies have trouble communicating their climate promises. This fight is further complicated by increased regulations and an overall mistrust of their greener initiatives. Kähkönen noted that the heightened scrutiny has led businesses to start using much more evidence to back up their claims. At the same time, it likely steered some firms toward the decision to remain quiet.
The NewClimate Institute has highlighted instances where major corporations have retracted unsubstantiated claims regarding carbon neutrality. This is a positive trend, leading to firms adopting more cautious and more realistic climate goals. As Kähkönen noted, “If we zoom out a little we can say that increased scrutiny has pushed companies to be more cautious and evidence-based in their claims – and that is positive.”
The phenomenon of greenhushing is not entirely welcomed. As the reality sinks in, companies pull back or tone down their green rhetoric, even as other companies double down and make big climate commitments. According to PwC’s State of Decarbonization report, only 13% of companies reduced their sustainability efforts or public messaging on environmental matters. On the contrary, 32% of companies surveyed said they sped up their sustainability efforts amidst leadership transitions.
On this front, Marta Nieto-Garcia, another researcher studying this trend, noted the pressures that businesses are under. “When there’s stakeholder activism, lawsuits, or boycotts, it can cause firms to go silent for a while,” she said. Businesses find it difficult to quantify certain sustainability metrics. Their staff, for instance, might struggle to know just what proportion of their energy service solar panels provide.
As Kähkönen explained, greenhushing is a short-term strategy. He cautioned that if it is left to fester, it could develop into an enormous trust chasm between consumers and corporations. “About two or three years ago there was a real shift in the understanding of how credible climate neutrality and carbon neutrality claims were, and many were found wanting,” stated Thomas Day from South Pole.
Yet, despite these challenges, plenty of financial companies are excited about improving communication around their net-zero carbon plans. Over a third of these companies intend to make far more information available on their climate targets. This indicates that we may be moving beyond the greenhushing stereotype of silence.
The European Union has taken steps to address greenwashing through its Green Transition Directive, which includes provisions requiring clearer labeling regarding product sustainability. This action will help put an end to these false claims and advance more meaningful accountability for all companies with respect to their impacts on the environment.