This blog was written by Dominic Alston, Junior Content Manager at Spreckley
‘Greenwashing’ has been a key sustainability buzzword to enter the zeitgeist over the last few years. It generally refers to when businesses, governments, or other organisations lie about their impact on the environment; by covering up evidence of harm, or over-exaggerating achievements in sustainability or climate action.
As companies raced to promote their net zero plans over the last few years, many were met with criticism; they were either unsubstantiated, ambiguous, opaque, or just didn’t go far enough. This resulted in plenty of bad press for some of the biggest household brands, and it seems that many corporations have learned a lesson from this PR blunder.
However, instead of realising that having effective, transparent climate action is essential to a modern day company’s reputation and risk analysis, too many decided to effectively ‘go into hiding’. Enter a new buzzword and a surprising trend for 2023: ‘green-hushing’.
Why is this new trend on the rise, and what do PRs need to know?
According to the Corporate Governance Institute there are two main reasons for green-hushing: either companies don’t want to be called out if they fall short of their stated decarbonisation and sustainability targets, or they don’t want to be called out for greenwashing.
For example, one recent study (Net Zero and Beyond) revealed that one in four companies said they would now not publish their science-aligned climate targets, based on extensive research of 1200 companies across 12 countries.
It’s not all bad news though. As the number of companies setting science-backed targets has more than tripled over the last year, according to the same study.
So, what does this new green-hushing trend mean for the public relations, marketing, and advertising industry? Comms professionals not only need to ensure that businesses tell the truth about their sustainability goals (instead of greenwashing) they also need to make sure that their clients continue speaking about the climate crisis in the first place. Only then can investors, consumers, governments, and regulators consistently demand and encourage change. Transparency, whether political or corporate, is not only important for climate action, it is also in-itself the key to a more just, liberal, and democratic society.
A history of false claims…
One reason for the potential growth of green-hushing is simply that businesses want to avoid controversy and criticism. It is often easier to be silent on an issue than make serious changes to ‘business as usual’.
Net zero goals, decarbonisation efforts, and current impact on environment, have all been grossly exaggerated by businesses in the past. Environmental Social Governance (ESG)-focussed investment portfolios have done the same – both intentionally to attract more investor capital and as a result of businesses misreporting their impact on the climate.
Nearly half of all green claims in the EU were “exaggerated, false or deceptive”, and could potentially qualify as unfair commercial practices, according to a 2021 assessment of green claims. And when it comes to investment and ESG, over half (55%) of funds marketed as low-carbon, fossil-fuel-free and green energy exaggerated their environmental claims, with more than 70% of these funds falling short of their targets, according to a 2021 report by InfluenceMap, a London-based non-profit that evaluates equity funds with over $256 billion value.
During 2022 there has been an increasingly vocal response to greenwashing, with more companies finding their claims and actions more stringently criticised. This has led to major companies and even governments being taken to court for failing to uphold their environmental promises. For example, Burger King, HSBC, FIFA, H&M, and Walmart are some of the household names targeted by lawsuits or bad press in relation to false claims. These cases have been brought to light by advertising standards authorities as well as legal charities such as ClientEarth.
To avoid bad press and legal action, some businesses seem to be avoiding any discussion of their climate action, or lack thereof. However, this may not be possible for long, as 2023 may finally be the year that the ESG industry and corporate climate action are standardised and regulated.
Growing political will to legislate
In March 2021, the EU’s Sustainable Finance Disclosure Regulation (SFDR) came into force. This new legislation, alongside the EU Taxonomy for sustainable activities, clamps down on greenwashing by helping investors distinguish between different levels of ESG strategy.
Additionally, in June 2022 the European Parliament and Council reached an agreement on the Corporate Sustainability Reporting Directive (CSRD), following a landslide victory with 525 voting in favour and, and only 60 voting against.
This new EU directive clearly states that it will: “modernise and strengthen the rules about the type of social and environmental information that companies have to report. A broader set of large companies, as well as listed SMEs, will also now be required to report on sustainability – approximately 50,000 companies in total.”
In essence, EU companies and EU-based subsidiaries of international companies will have to publish their impact on the climate alongside their yearly financial reporting. This is a hugely important policy; no longer can companies exaggerate or lie about their impact on the climate, and therefore ESG-minded investors can make more accurate decisions about the true impact of their portfolios.
Elsewhere, the Financial Services Agency in Japan is currently finalising its code of conduct for ESG data providers. This is a soft law and not legally-binding, as it only suggests that ESG data providers use a sufficient number of qualified analysts while giving companies enough time to examine the information for errors. It may not be as broad or bold as the EU’s CSRD, but it is another clear example of the growing political will to better regulate and analyse the information we have about a business’s impact on the environment.
A race against legislation
It is clear that many businesses will try their best to avoid committing to serious climate action, despite what’s at stake. However, now that so many have been called out for publishing exaggerations or falsehoods, it seems that many have taken the ‘green-hushing’ route -saying nothing at all. However, thanks to the EU’s new CSRD, this will soon not be possible.
We need more legislation like this to properly tackle the climate crisis. Only full transparency, regulated and enforced by national, international and multilateral authorities, can ensure that businesses are true to their word and held to account.
PR, marketing and advertising agencies are limited – and can only do so much to encourage their clients to change policy. However, by continuing and engaging with the ESG and sustainability conversation, agencies can help keep up the pressure that eventually translates into action.