What is Greenhushing
Greenhushing refers to the phenomenon where companies intentionally conceal or reduce disclosure in their sustainability statements and actions, meaning that their actual actions in sustainability outweigh their public statements. Greenhushing and greenwashing belong to two opposing directions, with the latter involving exaggerated statements and false advertising, while the former is exactly the opposite.
Related Post: What is Greenwashing? How to Avoid Greenwashing?
Why do Companies Choose Greenhushing
There are many reasons why companies choose greenhushing, such as:
- Companies are concerned about criticism and opposition from stakeholders. Although sustainability is an important topic in the long-term development of companies, some stakeholders believe that investing in sustainability may affect their short-term performance and therefore hold a negative attitude. Companies proactively not disclosing their sustainable actions can avoid these criticisms.
- Companies believe that sustainable actions have uncertainty. Companies may introduce sustainability factors into new products and services, and there is uncertainty about whether these products and services will be popular in the market and create more value. Reducing sustainable disclosure can reduce market attention to changes in a company’s products and services.
- Companies can avoid greenwashing caused by sustainable disclosure. The risk of greenwashing can be divided into two categories: subjective and objective. Subjective greenwashing refers to companies intentionally exaggerating their advertising or making false statements, while objective greenwashing refers to companies unintentionally making such advertising or statements in the absence of sustainable data and methods. Due to the high attention paid by regulatory agencies to greenwashing, reducing sustainable disclosure by companies can avoid these greenwashing issues.
- Companies lack guidance on information disclosure within the industry. Many jurisdictions are developing sustainable disclosure rules, but the implementation time of these disclosure rules is usually within the next three to five years, and current companies can choose to voluntarily disclose. In the absence of clear and explicit rules, companies may prioritize mandatory regulatory requirements over proactively making disclosures.
How to Avoid Greenhushing
Based on the reasons why companies choose greenhushing, stakeholders can avoid it from the following aspects:
- Investors: Focus on the relationship between corporate sustainability and long-term value. Investors can understand the sustainable risks and opportunities that companies face in the long term, as well as the impact of sustainable actions on long-term value growth.
- Consumers: Pay attention to the positive impact of sustainable products and services provided by businesses. These positive impacts not only involve environmental aspects but may also involve consumer health and the impact of new technology applications on costs.
- Regulators: Develop clear and explicit guidelines for sustainable information disclosure. These regulatory policies can help companies develop information disclosure plans and reduce greenwashing risk.
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