[Energytopia] 'Greenhushing', a Backlash Against ESG Emerges

Companies Refusing Carbon Reduction Commitments Triple
Excessive Pressure Stifles Business Activities

Global consulting firm Ernst & Young (EY) released the results of the '2023 Sustainable Value Study' in November last year, which involved interviews with 520 Chief Sustainability Officers (CSOs) from various companies. According to the study, only 34% of respondents said they would increase spending on carbon reduction in the future, a significant decrease from 61% the previous year. The number of actions taken to address climate change dropped from 10 to 4 within a year.

Notably, one in five of the surveyed companies refused to make a public commitment to carbon reduction activities. This figure has tripled compared to the previous year. The American political media outlet Politico analyzed that the backlash against ESG (Environmental, Social, and Governance) is stimulating companies' 'greenhushing' strategies.

Greenhushing is a term combining 'green,' meaning environmentally friendly, and 'hushing,' meaning silence. It refers to companies' reluctance to publicly disclose their climate change activities. The term is believed to have been coined in 2008 by brand strategist Jerry Stipelman. Greenhushing gained attention after being cited in the 2022 Net Zero report published by climate consultancy South Pole. According to the report, 67% of those surveyed had carbon reduction targets and plans, but 23% did not disclose them publicly.

Greenhushing is often compared to greenwashing, which involves exaggerating carbon reduction activities. Although they may sound like opposites, they are actually two sides of the same coin. One reason companies avoid actively publicizing their greenhouse gas reduction efforts is the risk of being criticized for greenwashing if they fail to meet their targets.

Greenhushing has become a topic of controversy again this year. On the 16th (local time), PIMCO, the world's largest bond manager, announced its withdrawal from Climate Action 100+. The day before, JP Morgan Asset Management and State Street Global Advisors officially withdrew. BlackRock, the world's largest asset manager, did not withdraw but transferred its membership to its subsidiary, BlackRock International.

Climate Action 100+ is a coalition of investors urging companies to reduce carbon emissions. It includes over 700 investment firms managing a combined $68 trillion (approximately 9,984 trillion KRW) in assets. At one time, companies proudly announced their participation in Climate Action 100+. In South Korea, Samsung Electronics, POSCO, SK Innovation, and Korea Electric Power Corporation joined the initiative.

Bloomberg recently reported that the successive departures of major investors from Climate Action 100+ represent another form of greenhushing. The New York Times analyzed that the growing anti-ESG movement in the U.S., amid increasing chances of former President Donald Trump's re-election, likely influenced these decisions. Climate Action 100+ has entered a second-phase strategy to pressure companies into actual carbon reduction activities, which some argue could violate antitrust laws.

The recent trend shows that corporate carbon reduction efforts can be attacked from both progressive and conservative camps. A business insider lamented, "Corporate climate change activities are becoming extremely difficult." The scrutiny is intensifying, and regulatory pressures are increasing. In South Korea, mandatory ESG disclosures and the rising risk of legal lawsuits add to the challenges. There is a need for serious reflection on whether excessive pressure might ironically stifle corporate climate change initiatives.