Greenhushing: Hiding Climate-Risk Disclosures Is On the Rise

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You know what greenwashing means. Do you know what it means when a company does not publicize its Environmental, Social, and Governance (ESG) information? It’s a lesser-known term called greenhushing, which “reflects a new dynamic in corporate climate strategy,” Kathleen Biggins, founder and president of C-Change Conversations, said in a statement shared with Global Warming Is Real in an email.

Greenhushing could get public companies in trouble shortly. In March, the Securities and Exchange Commission (SEC) adopted new rules requiring public companies to disclose climate-related information. What the new rules specifically require companies to disclose include:

• Climate-related risks that have had or may have a material impact on business strategy, results of operations, or financial condition.
• Oversights by the board of directors of climate-related risks and the management’s assessing and managing those risks.
• The processes for identifying, assessing, and managing material climate-related risks and how the company manages those risks.

After multiple lawsuits challenged the new regulations, the SEC paused the rules in April. The lawsuits only delay what will eventually happen and highlight how much companies want to hide climate-related risks. The future is in disclosure, and those who seek to hide will eventually suffer the effects of greenhushing.

“While some view these rules as polarizing, their introduction is a clear acknowledgment of the financial significance of climate risks, a reality that many of our international peers have already embraced. While some criticize these new rules as either too ‘woke‘ or too ‘weak,’ it’s essential to recognize the fundamental principle they represent: investors deserve access to reliable information about climate risks impacting fiscal stability.” – Kathleen Biggins

An Increase In Greenhushing

South Pole, a Swiss carbon finance consultancy group, surveyed companies in 9 of 14 major sectors. Most of those surveyed have decreased their climate communications. In other words, those companies actively practice greenhushing. However, most companies said communicating net zero is good for the bottom line.

Almost half of the companies said they are pursuing net zero. But more than half find it difficult to communicate their climate action and plan to decrease external communications. Companies cited fear of scrutiny by investors as another reason for greenhushing. The group surveyed over 1,400 companies in 12 countries and four sectors. In South Pole’s 2022 report, only 23 percent of companies surveyed decided not to publicize their climate-related progress.

Texas: A Great Example of Greenhushing

Let Texas serve as a warning to companies that practice greenhushing. The great state of Texas is a cautionary tale of the consequences of greenhushing. In 2021, Texas banned municipalities from hiring banks with certain ESG policies. As a result, five large municipal bond underwriters left the state. Researchers from the Wharton School of the University of Pennsylvania analyzed the effects of the Texas ban. They found the ban could cost municipalities up to $532 million in additional interest in only eight months.

Texas published a list of companies boycotting the oil and gas industry in 2022. A year later, the State Comptroller’s office said it would continue to review investment funds. Texas has the eighth-largest economy globally, with more Fortune 500 headquarters than any other state. However, that could change as the ban dulls its competitive edge.

Another study released this winter found the ban translates to $668.7 million in “lost economic activity.” To compensate for that loss, the Texas economy would have to produce around $2.82 billion in Gross State Product. The ban also brings less competition, higher interest costs, and reduced resources that enable service provision.

Transparency is the Only Way

Ron DeSantis recklessly talks of his fight against “climate ideology,” corporate leaders hide behind a veil of plausible deniability, and the impacts continue to mount, putting it all at risk. This is not risk management but a fool’s errand. Transparency is the foundation of problem-solving and risk management. It is time for our business and government leaders to do their part.