Walking the Tightrope of Sustainability and ESG Communications
U.S. businesses today often find themselves walking a communications tightrope on matters of ESG and sustainability. The counter to greenwashing, greenhushing, has gained significant attention in the last several months, particularly as businesses aim to keep out of political debates without simultaneously backing out of publicly stated goals.
Simply put, greenhushing is the practice of staying quiet on sustainability progress. The reasons for greenhushing are innumerable but include the fear of being accused of greenwashing, increased regulatory scrutiny, and concerns about being seen as a laggard compared to other businesses.
As covered by the World Economic Forum, greenhushing is nothing new; companies have long felt the need to dial back communications around sustainability to avoid public scrutiny. And we should expect it to continue, especially in the face of the increasing politicization of ESG and sustainability.
Of course, it has been argued that silence on sustainability signals a lack of progress, and there is no doubt that silence is concerning. Greenhushing can hurt businesses that are making progress on sustainability and have a story to tell, with lessons worth sharing. It can hurt investors by diminishing comparable data for them to make well-informed decisions on sustainability-related risks and opportunities. It may signal a lack of transparency with employees, inhibiting their ability to contribute to sustainability efforts. And it can hurt the overarching counter-narrative to anti-ESG sentiments, by keeping positive stories of progress from being seen widely.
Although companies may be staying silent on ESG-specific issues, we are seeing continued progress on internal goals previously set on ESG metrics, such as diversity, equity and inclusion, and emissions. This transition to quiet progress signals that ESG is not going away. Though the terms used may shift, the basis of how ESG came to be in the first place—through stakeholder capitalism—and why it is important for the future—to mitigate risks such as climate change—remain relevant.
Companies can take this challenging environment as an opportunity to embed relevant ESG metrics into business and operations and align internally on ESG strategy and communication. This would allow them to understand the impact of sustainable practices on business performance, which we know can include risk mitigation, operational efficiencies, fulfilled and productive workforce, and positive financial impact. Demonstrating this business case for ESG and sustainability through clear communication is essential to combat backlash.
To effectively balance the tightrope of sustainability strategy and communications, there are a few things to keep in mind.
- Focus on areas of material risk to integrate your sustainability strategy with your business strategy. Connect sustainability to fiduciary impact and use data to tell a well-informed story about sustainability progress and business impact.
- Stay agile, while remaining true to your company values and purpose.It is neither necessary nor helpful, for every business to take up the banner of every environmental, social, and governance issue. Staying aligned and consistent with your values and business imperatives, while remaining open to discussions around changing expectations from key stakeholder groups, will help businesses avoid scrutiny in the long term.
- Engage employees, first and foremost. Employees are essential to co-creating new ways of working, better policies, and innovation across E, S, and G areas. Sustainability success hinges on how well you attract and retain top talent, engage and motivate employees on material issues and encourage ideas from across the company.
- Consider your business’s place in the global context. Companies should be careful of dismissing ESG and sustainability-related efforts, especially as regions such as the EU continue to increase regulatory pressure on such disclosures. Extraterritorial impacts of such regulation, and even the pending regulation from the SEC for US public companies on emissions disclosures, only add to the complexity of this issue area.