Key Impact Points:
- 58% of major U.S. companies underreport genuine ESG progress to avoid greenwashing accusations.
- Global ESG assets reached $30 trillion in 2022, with 85% of investors linking them to better returns.
- Transparent ESG reporting is crucial for investment and consumer trust.
Underreporting ESG Efforts
A new report reveals that 58% of the 100 largest public and private U.S. companies are greenhushing their ESG (Environmental, Social, Governance) progress. These companies avoid promoting their sustainability achievements to sidestep accusations of greenwashing, thereby missing out on investment opportunities and consumer trust.
The Transparency Gap
The Transparency Index 2024, published by data-insights company Connected Impact and data-science consultancy Ringer Sciences, reviewed over 600,000 communications from 200 companies. It found that only 2% of U.S. companies over-promoted their ESG efforts, while a significant 58% under-promoted, resulting in a transparency gap. This cautious approach can deter investment and undermine credibility.
“Businesses are under increasing pressure to avoid greenwashing,” said Connected Impact CEO Dr. Lucy Walton. “But businesses must also take action to avoid ‘greenhushing’. Our data reveal that businesses are more likely to under-promote than over-promote their ESG initiatives.”
Investment and Consumer Trust
With global ESG assets surpassing $30 trillion and 85% of investors believing ESG assets lead to better returns, the reluctance to communicate ESG progress is a missed opportunity. Brand Finance’s Sustainability Perceptions Index also highlights the financial impact, showing that major brands are losing billions by failing to communicate their sustainability efforts.
Closing the Transparency Gap
The report’s methodology involved analyzing LinkedIn and Twitter (X) posts from top companies to measure the transparency gap between communications and actual disclosures. It found that emission disclosures had the largest gap, while governance had the smallest.
“ESG transparency is currently a missed opportunity for the top 200 businesses in the UK and US,” Walton added. “Transparent businesses attract more investment and top talent. This report equips businesses to identify — and close — transparency gaps.”
Moving Forward
In response to the growing scrutiny, tools and resources like AI-based platforms and guides for ad and communications agencies have emerged to help companies improve ESG transparency and meet increasing regulatory demands.
Related Article: EU Council Advances Green Claims Directive to Combat Greenwashing
