Silence may be golden – but not when it comes to sustainability communications, says climate consultancy South Pole.
While corporations have been racing to showcase their green credentials and commitment in past years, more executives are now choosing to “greenhush” or tiptoe around what they say and reveal, according to South Pole’s latest report into the global sustainability landscape Destination Zero: the state of corporate climate action.
The “greenhush” movement – where companies intentionally scale back their climate communications for fear of facing criticism – is, arguably, in part due to heightened public scrutiny over yesteryear’s green claims. Some claims are laudable, but some others are inaccurate.
Regulators, meanwhile, have also stepped in to define standards and improve structures within the market with mandatory reporting and compliance requirements, prompting businesses to further examine their sustainability strategies – albeit quietly.
The latest silence could stall progress. Greenhushing does much more harm than good as it stunts competition and innovation, says Shruti Singh, South Pole’s Asia Pacific director of advisory.
Shruti Singh is the Asia Pacific director for climate strategies at South Pole. Image: South Pole.
Companies should instead follow a set of principles on environmental communications, which includes being authentic by transparently speaking about both successes and challenges. Any green claim should be preceded and backed up by a climate strategy aligned with the goals of the Paris Agreement. The foundations of these claims must be built on stakeholder engagement, added Singh, who is based in South Pole’s Singapore office.
On the back of South Pole’s latest corporate sustainability landscape report, Eco-Business caught up with Singh to hear how businesses can navigate the complexities of going and speaking green.
What aspects of sustainability have become more important among stakeholders in recent years – and why?
First, net zero is increasingly the best practice and minimum ambition for businesses and companies, along with setting near-term interim targets. We are seeing more net zero targets validated by the Science-Based Targets initiative; there were more new net zero targets in 2022 than the previous seven years combined. Net zero has become a single common goal that has unified countries, industries and businesses. While the pathway to getting there may not be entirely clear, the North Star is clear.
Second, there is increasing focus on climate-related disclosures amid tighter international regulation. In Asia, Singapore recently announced mandatory climate-related reporting requirements for large listed and non-listed companies in line with the IFRS International Sustainability Standards Board (ISSB). In Australia, the draft ISSB-aligned legislation and framework have been released for review. Similar moves are expected in Japan and Hong Kong.
There is a global convergence of regulations towards standards such as the ISSB, the European Union’s Corporate Sustainability Reporting Directive, and the United States’ Securities and Exchange Commission. These regulations themselves align with existing best practices such as the Global Reporting Initiative or Task Force on Climate Related Financial Disclosures.
With these disclosure requirements, companies would need to deal with the practical challenge of having visibility of, and data on, complex value chain activities. However, many companies do not yet have the capabilities or methods to properly assess and report on their full value chain exposure. Companies will also need to evaluate and quantify the financial impact that more frequent and more severe weather events will have on their supply chains. At the same time, companies must quantify their cost exposure to potential carbon taxes, shifting consumer behaviour, and change in technology.
On the other side of disclosures, we have regulations like the EU Carbon Border Adjustment Mechanism or EU Deforestation Regulation. These aren’t just national or regional regulations, but hold the potential to spur a transformational shift beyond national borders, acting as a catalyst for global decarbonisation efforts. These disclosures and regulations, along with awareness of the acute financial risks that are embedded in a company’s operations and value chains, are becoming key drivers of climate action.
Third, there is increasing focus on the claims that businesses are making about their climate ambition and progress. Companies may run into difficulty in making robust, transparent and accurate disclosures, as they traverse a constantly evolving landscape. Corporations are also being closely scrutinised by stakeholders and regulators, and we continue to see greenwashing allegations. Organisations want help to understand what claims and environmental communications they should be making, and how they can align with best practices.
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We don’t want companies to over-claim or greenwash, yet we don’t want them to greenhush. We want them to take climate action and then transparently communicate their claims.
What are the best practices for corporate sustainability communications?
Companies can no longer make unverified or oversimplified claims. We believe that any credible communications should sit on a few key principles.
The first is transparency – companies need to avoid vague statements and instead provide clear definitions to avoid leaving anything to interpretation. The second is accountability – they must be upfront about progress, be it good or not-so-good. The third is impact – companies must make claims based on robust and credible climate action. The fourth is authenticity – they should avoid making one-off statements, and make sure the claims are aligned with the company’s holistic sustainability strategy.
The point is that climate action is a journey, and the communications around it need to be structured as such; it should be about how the company is constantly evolving as regulations change, as they meet near-term goals, as they iterate their products and services, and so on.
Broadly, if a company can follow these high-level principles, they would be able to effectively speak to any audience. Public awareness of climate change and greenwashing is constantly evolving, but ensuring that any corporate communication is transparent, accountable, impact-focused, and authentic will help avoid reputational issues while building trust with any climate-conscious customer or client.
In South Pole’s Net Zero 2024 report, there is mention that some companies are setting net zero goals by or before 2030, including in hard-to-abate sectors. Why this trend of setting such lofty targets?
2030 targets for net zero certainly raises eyebrows. However, it is critical to individually look at companies to sort those taking bold action and those who may not understand the scope and scale of the net zero challenge.
For a small number of industries, like professional services, a 2030 date is brave but potentially achievable. However, for many companies, in the heavy industry for example, a 2030 net zero date is not credible and indicates that the company may simply be talking about net zero across Scope 1 and 2 (emissions from its operations and electricity used). This excludes Scope 3, or emissions embedded in products and services from their supply chains.
Excluding Scope 3 emissions from a net zero target and then claiming a date that you will reach it is misleading and poses serious reputational risks. This is basically kicking the PR can down the road, when setting a later, credible date would be the more credible and authentic option. It will also save your communications team a lot of time as they won’t have to manage the fallout.
The primary thing to remember here is that target dates, while important, should be underpinned by credible plans to reach net zero emissions. A later target date with a clear roadmap demonstrating an understanding of the necessary tools to decarbonise is much more credible – and valuable – for customers, clients, employees, and our climate.
While having a clear timeframe to reach net zero emissions is important, it is not the most decisive factor in defining the ambition of a corporate climate target. Alongside time-bound targets, it is even more critical for a company to have clear intermediate goals to slash emissions, as well as a detailed, measurable strategy to achieve overall net zero emissions across its operations – specifically in its supply chain.
South Pole reported that 58 per cent of companies are decreasing climate communications in 2023. What is behind this trend?
Greenhushing is unfortunately the new normal, and it is present in most sectors globally. Beyond the 58 per cent figure, it is also important to note that 18 per cent of our respondents do not plan to publicise their science-based targets at all. At the same time, 93 per cent see communications around their net zero strategy as a key driver of commercial success. So, while companies recognise the value of communications, they are still greenhushing.
We also asked the companies why this was the case. Out of the 58 per cent that scaled back communications, over half cited regulations on sustainability reporting becoming more demanding. Other reasons were heightened scrutiny from customers and the media, a lack of sufficient data to inform claims, and the lack of industry guidance on communications.
Some businesses want to set science-based targets but hold back on the validation because that immediately puts them in the public eye.
Greenhushing can be damaging to corporate climate action. There would be no industry knowledge-sharing without transparent sharing of climate targets. There would be no peer pressure, which is an incredibly strong driver of climate action. It is important to have open, honest conversations about the progress and challenges of reaching net zero.
Is the greenhushing trend all bad then, if part of why companies scale back communications is to meet more demanding regulations and only speak about what they can back up with data?
We need a corporate climate sector bursting with ideas, ingenuity, and action if we are to reach the goals of the Paris Climate Agreement. Companies of all sizes will have to test and learn as they progress on their climate journey. To create this environment, we need communications and competition that spur action. The seismic changes we need to see to reach net zero will not happen in isolation, nor come from one company alone.
So, while greenhushing may not seem to be a problem, the lack of communication, collaboration and sharing of risks stunts innovation and competition in the race to net zero. Businesses don’t have time to individually figure out what they need to do, especially with more climate regulation looming. Learning from peers and competitors is as important as learning by doing.
Regulation is clearly a major concern for companies and is leading to greenhushing. Many report that they are interpreting the regulations and scrutiny as an effective ban on climate communications; that if they are not equipped to report, they can just choose to sit back and not report at all. This is a concern. It goes back to businesses wanting to understand what constitutes an appropriate, credible claim. Sometimes, they are reporting the bare minimum that they can justify.
We don’t want companies to over-claim or greenwash, yet we don’t want them to greenhush. We want them to take climate action and then transparently communicate their claims.
How do you achieve robust climate action, which you’ve mentioned is the bedrock of good sustainability communications?
Achieving net zero emissions across a business and its supply chain is possible but complex. Each company will face unique challenges and that is why communicating what you’re doing, what targets you’re striving for and how challenges are being tackled is so important.
Robust climate action starts with an understanding of the challenge: measuring your footprint and spotting climate risks are your foundations. With this knowledge, any company will be in a good place to take the next step: setting credible, science-based targets and a roadmap to reach these.
Companies should approach this in a sequential manner. It’s clear from South Pole’s Net Zero Report that setting a net zero goal and a clear target date has now become standard practice among climate-conscious companies. Momentum in Australia and across Asia continues to build at pace, and those who fall behind will almost certainly be playing catch up for some time.
Companies that have set a science-based foundation for their sustainability strategy, and move quickly to reduce emissions across their operations and supply chains, have a good platform from which to communicate. Credible climate communications from this position are achievable and set companies apart from the competition.
From this point, companies should focus on authentic and transparent communications. This can be done by defining why you’re taking climate action, ensuring that all communications align with demonstrable impact, while ensuring challenges, wins and shortcomings and transparently reflected. This will help the company navigate reputational pitfalls and stand proud as a climate leader.
How can stakeholders help with such efforts?
Change doesn’t happen overnight; it happens on a groundswell of many companies, employees, investors, value chain partners and others making incremental improvements.
The transformation to net zero requires the buy-in of businesses across entire value chains. Companies need to identify their stakeholders – be it customers, investors, or suppliers, for instance. They need to be given key roles in the decarbonisation strategy, which will help them appreciate the intensity of the task ahead.
Value chain partners will be key to addressing Scope 3 emissions. Investors must also understand that net zero funding should not be viewed as an operational expenditure, but a capital expenditure; it won’t only involve day-to-day spending, but major long-term investments.
But when a company has measured their footprint, rolled out credible targets and strategies, and compensated for unavoidable emissions, it empowers the entire stakeholder group with a loud voice. Communicating about the breadth and depth of actions presents opportunities for every stakeholder involved in the process.
The interview has been edited for clarity and brevity.
