New research has revealed that that almost six in ten (58%) of the top 100 largest public and private US companies are responding to greenwashing concerns by keeping quiet on genuine ESG progress, putting them at risk of ‘greenhushing’.
With global ESG assets surpassing $30 trillion in 2022 and 85% of investors reporting that ESG assets lead to better returns, companies that remain quiet may be missing out on potential investment opportunities and consumer demand.
The Transparency Index 2024 report, published by data insights company Connected Impact, and data science consultancy Ringer Sciences, reviewed over 600,000 corporate 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.
GREENHUSHING RISKS
The findings reveal only 2% of US companies ‘over promoted’ their ESG progress, with 58% “under promoting” and disclosing more factual data on ESG than promoted. In a climate of stringent regulatory scrutiny, where mistakes can result in fines and reputational damage, companies may be hesitant to promote their legitimate ESG credentials due to fears of greenwashing accusations. This puts them at risk of ‘greenhushing’ – where organisations choose not to publicise details of their climate targets, or their plan to reach their targets, to avoid scrutiny and allegations of greenwashing.
“Businesses are under increasing pressure to avoid greenwashing – with increasing regulations and potential fines for those who misrepresent their legitimate ESG efforts,” stated Dr Lucy Walton, CEO of Connected Impact. “But businesses must also take action to avoid ‘greenhushing’. Our data reveals that businesses are more likely to under-promote than over-promote their ESG initiatives. This cautious approach can deter investment and undermine credibility.”
ETHICS, DIVERSITY AND INCLUSION
Only four in ten (40%) of companies offered a ‘balanced’ picture, with a minimal transparency gap. The report argues that businesses with a small gap are more trustworthy than their peers. The report examined emissions, ethics, diversity and inclusion topics to represent E, S and G criteria. Emission disclosures had the largest gap, with 67% of companies disclosing more on emissions than they communicated. Governance had the smallest gap, with 40% of companies having a gap between their ethics discloses and communications.
Businesses that are transparent about their ESG progress can drive investment and gain credibility with consumers. “ESG transparency is currently a missed opportunity for the top 200 businesses in the UK and US. We know most consumers favour responsible brands and transparent businesses,” noted Dr Walton. “We know a well-governed transparent business attracts more investment and top talent. This report equips businesses to identify – and close – transparency gaps so we can all make better decisions about where to invest our money, time and attention.”
Click here to read the full report.
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