Once upon a time, being the executive to announce that your company was committing to net-zero, or investing in renewable energy to power production, instantly elevated you in the cool kids club. Now, executives don’t seem to want to be anywhere near said club, actively downplaying their environmental initiatives, a term being referred to as “greenhushing.”
Put simply, greenhushing is when companies underreport or avoid publicly disclosing their environmental efforts. The term, although not necessarily new, has attracted attention in the past few months as big asset managers—such as BlackRock, and its CEO Larry Fink—are facing backlash for their ESG commitments. Banks have threatened to drop finance alliances over fears of being sued and inconsistent requirements.
Conferences, such as the one in the Swiss Alps that no average person could ever dream of affording (we’re talking about the World Economic Forum in Davos), are often a place for corporate climate commitments, where greenhushing’s even more unpopular cousin, greenwashing, is often in effect. This year, it looks like greenhushing might be the hotter topic of discussion.
At last year’s Davos gathering (which was pushed back to May due to Covid-19 concerns), more than 50 companies, including Ford Group, committed to purchase commodities from lower-emissions sources. Tech companies, such as Microsoft and Salesforce, said they would invest $500 million into technology that could capture and store carbon.
But this year, they’re being criticized for such lofty green ambitions. UN Secretary-General António Guterres called on corporate leaders to make “credible and transparent” pledges, specifically highlighting fossil-fuel producers and their financiers for creating an (ironically) unsustainable business model.
Additionally, for some organizations who have publicly addressed their green commitments, they’re pointing the finger at other bodies for why it’s impossible to accomplish, including governments they view as getting in the way.
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Finance chiefs are beginning to see ESG teams shift under their purview as the function becomes more reporting-heavy for SEC purposes, meaning that CFOs could be the ones seeing environmental commitments landing in their laps.
Making bold environmental claims to garner attention without an actual plan or implementation in place can also land companies into legal trouble. German asset manager DWS is being investigated by German authorities for allegedly misleading investors after its former group sustainability officer Desiree Fixler blew the whistle on the company, claiming sustainability overpromising. The SEC has also set up a task force, unimaginatively titled the Climate and ESG task force, to investigate ESG-related crimes. The task force made six enforcement actions in 2022, including a $4 million penalty against Goldman Sachs last November.
Unfortunately, greenhushing appears to be gathering momentum; South Pole, a climate project developer and solutions provider, surveyed 1,200 companies with net-zero targets (meaning they’re trying to get as close to zero emissions as possible) and found that a quarter of the companies will not be publicizing their science-based commitments.
Whether the current anti-ESG backlash will have lasting effects on companies’ climate commitments and how they promote them remains to be seen. But the actual climate can’t wait for the business climate to become more favorable to companies that are intimidated by anti-ESG activists, so hopefully, greenhushing is a trend that doesn’t take root and grow over time.—KT