These days when you visit a corporate website you may notice claims of sustainability with claims that the company will become netzero by 2030 or that they will stop using fossil fuels.
However, new laws in many countries means that companies can get hefty fines for greenwashing. Now, many companies are pulling off any reference to sustainability in a move known as greenhushing.
Greenhushing is when organizations keep quiet about environmental sustainability to avoid attention, even when they have strategies and efforts underway.
It gained more widespread coverage after October 2022, when Swiss carbon finance consultancy South Pole highlighted the trend of greenhushing in a report. It noted that nearly a quarter of 1,200 companies with a sustainability head are not publicizing achievements “beyond the bare minimum.”
During the first half of 2023, 44 sustainable funds chose to remove the “sustainable” label from their brand names in the EU.
Fears of Being Labelled Greenwashers
Companies are hesitant to open themselves up to scrutiny, particularly if they’ve had a run of inadvertent greenwashing. High profile court cases have shown that improper reporting and misleading advertising can leave businesses vulnerable to governmental scrutiny, litigation, reputational damage, and loss of revenue.
In the past few years, activists and organizations have sued companies for rampant greenwashing campaigns, including H&M, Nike, Allbirds shoes and apparel company Canada Goose.
Corporations have a long history of using their advertisements to mask the environmental and health impacts of their products. Fortunately, Marketing Declares aims to act as a sustainability standard for marketers, with the purpose of “using the influence, energy and tools of [the] industry to reimagine, rebuild and heal our planet”.
Many companies could also be taking a wait-and-see approach to ensure their communications pass regulatory muster or avoid having to report certain topics altogether. Between regulations such as the European Union’s Corporate Sustainability Reporting Directive, the United States Federal Trade Commission's Green Guides and various others, there's a real risk that making certain claims could lead to liability if they cannot be fully substantiated or if they inadvertently mislead consumers.
Amid this skepticism, the consumer is more likely to misinterpret greenhushing as having something to hide, building distrust whether conscious or unconscious, rather than creating it. The news may not always be good, but looking good should be a byproduct of your efforts, not the aim.
Unclear Benefits to Corporate Profits
Much is made in the media about climate change denial and the deniers are doubling down on tactics that create headwinds for society’s progress toward net zero. Several states, most notably Florida, are divesting billions of dollars from BlackRock because it has developed strong ESG portfolios.
Consumers intuitively think that green products perform less well, so they’ll need to use more, or are more expensive than their conventional counterparts, even when objectively this is not the case.
Even though the distrust of climate science is arguably most focused in the US, 54 percent of adults view climate change as a major threat. In Europe’s two largest economies, France and Germany, it’s 81 percent and 73 percent, respectively.
While corporations are seeing the benefits of ESG, work still needs to be done to correlate profits and sustainability.
Worries About Not Doing Enough
Public demand for environmentally friendly goods and services has surged in the past few years. But this places corporations in a place where over promoting sustainability efforts can backfire if they don’t hold muster under public scrutiny.
The Transparency Index 2024 — published by data-insights company Connected Impact and data-science consultancy Ringer Sciences — reviewed over 600,000 external communications from 200 companies to identify the “transparency gaps” between what businesses communicate on social media about ESG topics and what they factually disclose about their targets and performance in annual reports, websites and other corporate documents. Only 2 percent of US companies “over-promoted” — or greenwashed — their ESG progress, with 58 percent taking the opposite route and “under-promoting” and -disclosing more factual data on ESG.
Competitive Concerns
It’s understandable that broadcasting internal initiatives to the competition in most cases is ill-advised. Anything you say could be used against you either through counter-communications or by setting a higher standard to surpass.
Transparency about your company’s sustainability efforts is more likely to enhance your competitive advantage than undermine it.
The solution is to collaborate with peers. This gives all market participants greater clarity and confidence over which claims are appropriate and which aren’t. It requires businesses to be open and transparent about their sustainability measures and the veracity of their green claims.
Dare your competitors to rise to the challenge. The planet and your brand will be better for it.
