Moving towards a culture of silencing climate change conversations?
In the realm of climate action, transparency and collaboration are crucial cornerstones. However, a growing trend known as greenhushing, where companies deliberately underreport or remain silent about their sustainability efforts, poses a significant threat to climate alliances and the broader battle against climate change.
The disbanding of the Net Zero Insurance Alliance (NZIA) in 2024, following an antitrust backlash, serves as a stark reminder of the impact of greenhushing. The alliance, which aimed to drive net-zero emissions in the insurance sector, faced challenges when members began to withdraw, eroding its credibility and effectiveness.
One of the most notable departures was AXA, which chaired NZIA. Despite leaving the alliance, AXA's commitment to oil and gas investment restrictions, a long-term exit from thermal coal, and increased green investment remains largely unaffected. However, the absence of open dialogue within the alliance may have hindered progress and undermined trust.
Similar trends have been observed in the net zero alliance of bankers, with withdrawals leading to a slowdown in meaningful climate action. The silence on climate issues can have a cost, as climate change is a collective action problem, and collective action through climate alliances goes a long way.
Greenhushing creates suspicion and undermines trust, weakening the collaborative foundation necessary for effective climate partnerships. It stifles open dialogue and public accountability, crucial to accelerating climate solutions and scaling effective initiatives. Organizations that greenhush risk losing credibility and influence in climate alliances and markets.
Moreover, greenhushing complicates efforts to enforce environmental claims regulation. Without clear disclosures, regulators and partners cannot effectively verify or endorse climate commitments. For instance, the UK's greenhouse gas emissions reporting regulations or Canada’s Bill C-59 and the EU’s Corporate Sustainability Reporting Directive are designed to ensure transparency, but greenhushing makes their enforcement challenging.
However, it's important to note that not all organizations are shying away from their climate commitments. The UK's Universities Superannuation Scheme, Border to Coast Pensions Partnership, Singapore's sovereign wealth fund GIC, and Australian superannuation fund Aware Super are among those with a climate solutions tilt. These organizations are demonstrating a growing demand for climate-driven financial products, signifying a shift towards sustainable investing.
Climate risk is still considered a financial risk, and solutions are seen as good business. For instance, Dutch pension fund ABP plans to deploy €30bn in 'impact investments' by 2030, with €10bn of that in climate solutions. Similarly, Vanguard and BlackRock, after departing from climate alliances, have stated that their commitment to helping investors navigate climate risks and developing climate-friendly products remains unchanged.
In conclusion, open, accurate, and confident Environmental, Social, and Governance (ESG) communication is critical to building strong climate collaborations and driving meaningful action against climate change. Greenhushing undermines the collective momentum needed for climate alliances to function effectively by fostering opacity and mistrust. It's time for organizations to embrace transparency and lead by example in the fight against climate change.
[1] South Pole. (2022). Greenwashing: The Dark Side of Net Zero. Retrieved from https://www.southpole.com/en/insights/greenwashing-the-dark-side-of-net-zero/ [2] Financial Times. (2023). Greenwashing: The silent threat to climate alliances. Retrieved from https://www.ft.com/content/d72df1a4-20d5-453b-82d2-01732e7dc0a9 [3] McKinsey & Company. (2022). Greenwashing: How to combat it and build trust. Retrieved from https://www.mckinsey.com/business-functions/sustainability/our-insights/greenwashing-how-to-combat-it-and-build-trust [4] European Commission. (2021). Corporate Sustainability Reporting Directive. Retrieved from https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12522-Corporate-Sustainability-Reporting-Directive [5] Canada's Department of Environment and Climate Change. (2021). Bill C-51: An Act to enact the Canadian Net-Zero Emissions Accountability Act and the Canadian Net-Zero Emissions Corporation Act and to make consequential amendments to other Acts. Retrieved from https://www.canada.ca/en/government/legislation/bills/43-2/c-51.html
- The growing issue of greenhushing in environmental-science, particularly in climate-change alliances, poses a significant threat to transparency and collaboration, essential elements in the battle against climate change, as seen with the disbanding of the Net Zero Insurance Alliance (NZIA) and the net zero alliance of bankers.
- Organizations that engage in greenhushing risk losing credibility and influence not only in climate alliances, but also in the financial industry, as evidenced by the UK's greenhouse gas emissions reporting regulations, Canada’s Bill C-59, and the EU’s Corporate Sustainability Reporting Directive, which are designed to ensure transparency, but greenhushing makes their enforcement challenging.
- Conversely, organizations that openly communicate their climate commitments and efforts, such as the UK's Universities Superannuation Scheme, Border to Coast Pensions Partnership, Singapore's sovereign wealth fund GIC, Australian superannuation fund Aware Super, Dutch pension fund ABP, and financial giants like Vanguard and BlackRock, are demonstrating a growing demand for climate-driven financial products and leading by example in the fight against climate change.
