Louise Findlay-Wilson, managing director of financial service PR specialists, Energy PR, discusses green hushing, why it has arisen and its ramifications for those working in financial planning.
What is Green Hushing?
You might be forgiven for not knowing that much about green hushing, the reluctance to make environmental claims for fear of criticism. After all it is much less discussed and debated than greenwashing, and as a buzzword hasn’t really taken off. For instance, so far in 2024 we’ve monitored just 947 references to the problem on social and mainstream media compared to 46,500 comments or articles about greenwashing during the same period.
But just because the phrase isn’t in common parlance doesn’t mean it isn’t happening and creating some distinct challenges for paraplanners and financial technicians.
Why it has Arisen
There are a number of reasons why this trend has emerged. Firstly, the plethora of laws and regulations in place to discourage companies from greenwashing have created a natural reticence among some to mention green achievements at all. There’s a host of UK sustainability reporting rules, regulations and advice including the Financial Conduct Authority’s recent guidance on its anti-greenwashing rule which came into force on 31 May 2024.
In addition to all this, we’ve seen consumers and the media quick to call out greenwashing from brands when they see it. Whilst this is usually well-intentioned and can play a part in deterring dishonest companies, these increasingly public accusations of greenwashing have swung the pendulum the other way. Essentially, many companies have decided it’s too risky to shout about their sustainability efforts and goals for risk of being criticised and giving themselves a communications crisis to deal with.
A fear of investor backlash has also played a part in some parts of the US, where anti- ESG sentiment is very real. In 2023, more than 150 anti-ESG bills and resolutions were proposed in 37 US states, and at least 40 anti-ESG laws were enacted in 18 states.
The lack of clarity around how ESG performance should be accurately measured and reported has deterred others. Finally, some companies may be playing down their green performance for competitive reasons; hoping to quietly steal a march on their competitors by not reporting on incremental improvements or gains until a significant lead has been made.
Whatever the combination of pressures at work, the result is that even the greenest companies with arguably the most to talk about, are downplaying their green reporting. For instance, in its new Destination Zero report, 44% of the 1,400 eco-conscious companies studied by climate action consultancy South Pole, say comms around climate targets have become more challenging. As a result, 58% are reducing their communications and 18% have no plans to publish science-based targets at all.
We’ve noted this trend for ourselves. So far in 2024, we’ve found that companies have made 4% fewer references to environmental gains and sustainability in their annual reporting than for the same period last year. This may sound like a small decline, but it comes on the back of a whopping 41% rise in such reporting the year before.
The Problem it Creates
For those who need to conduct research for clients around investment opportunities, such reticence by companies to talk about their environmental gains and plans presents a very distinct challenge.
With less discussion of ESG in annual reports or cohesive and consistent reporting, it makes it much harder for advisers to know how good a firm’s green credentials really are and therefore whether to recommend them to their more ESG minded/eco-conscious customers.
Such customers, according to the annual ESG Attitudes Tracker, equate to 48% of private investors. How can those serving this significant portion of the investor community provide a proper, well-researched ‘all of market’ view, if companies are counting themselves out of the discussion by playing down their green credentials for fear of criticism.
Indeed, you could argue that such reticence is leaving the playing field clear for those companies who are happy making claims but whose offer may actually be less sustainable – further skewing the research and advice paraplanners provide.
Greenwashing may have created a significant problem, creating cynicism and undermining trust, but green hushing is equally challenging. Which is why we all need to encourage honest, consistent reporting, rooted in a solid framework that everyone can understand.
For more advice on handling ESG communications contact Energy PR.
