A report outlining the state of Environmental, Social & Governance (“ESG”) investing in private markets has suggested that a phenomenon called “greenhushing’” is causing some asset managers to retreat from their public environment, social, and governance reporting commitments.
Greenhushing refers to the practice of retaining information on climate-change mitigation strategies due to the fear that releasing this information could potentially risk a company’s reputation. Companies will either do this through avoidance or outright refusal to divulge any climate-action-related information, meaning they won’t provide any information if nobody asks and will decline to answer any queries that they do receive.
For some companies, this practice is a means of avoiding accusations of engaging in greenwashing, which refers to making misleading claims that lead investors and the public to believe that they are more environmentally friendly than they are. However, critics argue that greenhushing is a form of greenwashing because it leads to the impression that companies are acting with the interest of the environment in mind despite having no public benchmark for their supposed actions.
Other companies engage in greenhushing because they believe that there are too many risks but little value associated with announcing their climate goals, especially if they unknowingly exaggerate or omit something when they reveal their climate goals. Keeping their climate targets to themselves also means that companies cannot be called out if they fail to meet these targets.
According to “The State of Private Market ESG and Impact Investing in 2024” report, some companies are also reducing their focus on ESG and environmental-impact investment programs due to fear of backlash from parties that oppose green investment strategies. The report was published by Pitchbook, a market data provider that deals in venture capital and private equity markets. It found that, for the most part, most funds seem to focus on the environmental aspect of ESG.
Social-focused investment funds have steadily lost popularity since the U.S. Supreme Court ruled in June 2023 that college admissions programs that accounted for race were unconstitutional, effectively ending affirmative action in higher education. Several private-market participants are now modifying or walking back diversity, equity and inclusion (DE&I) programs to avoid future litigation, Pitchbook says.
Research by Switzerland-based carbon finance consultancy South Pole found that greenhushing is becoming increasingly common in the corporate world. The company polled more than 1,200 “heavy-emitting” companies in 23 countries and found that 25% of them were keeping their science-based, climate-change goals quiet even though they had set net-zero targets for themselves.
It remains to be seen whether the growing trend of greenhushing will fizzle out and companies that already embrace ESG principles, such as First Tellurium Corp. (CSE: FTEL) (OTCQB: FSTTF), will keep strengthening their implementation of those principles.
NOTE TO INVESTORS: The latest news and updates relating to First Tellurium Corp. (CSE: FTEL) (OTCQB: FSTTF) are available in the company’s newsroom at https://ibn.fm/FSTTF
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