Greenhushing: Why Some Firms Keep Quiet About ESG

First, there was greenwashing — a term referring to deceptive marketing campaigns and other performative gestures by companies to make consumers and investors believe that they are environmentally responsible.

Now, there is greenhushing. And it’s also a problem.

Firms engage in greenhushing when they are actively working to reduce their carbon footprint, produce less waste, manufacture less plastic, and build greater sustainability, but they don’t tell anyone about their efforts.

It seems like a contradiction for companies to be “doing good while doing well” and not blasting the news across every corner of the internet. But in today’s highly charged political and social climate, firms have a valid reason for keeping quiet, explains Wharton accounting professor Mirko Heinle.

If a company specifically states its ESG goals and reports its progress in hitting those targets, it could face pushback from stakeholders who find the plans aren’t ambitious enough, he said. On the other hand, it could also face backlash from investors and politicians who believe ESG efforts undermine profits or run counter to prevailing values. For example, oil-rich Texas recently banned its municipalities from doing business with banks that have ESG policies against fossil fuels and firearms.

“We can see how firms are maybe caught in the trap between appearing not green enough or too green at the same time. It’s just a matter of who you want to make angry a little bit,” Heinle said during an interview with Wharton Business Daily on SiriusXM.