Erica Hall

There has recently been a rise in greenhushing as firms choose to go incognito and underreport or hide their green credentials from the public, according to Morningstar.

Earlier this week the researcher released the ‘Is Greenwashing Scrutiny Leading to the Rise in Greenhushing?’ report highlighting the rise of activity in this area.

Greenhushing differentiates from greenwashing which involves companies overselling or misstating the green credentials of a product, rather than under-reporting issues.

In the report, Morningstar ESG lead Erica Hall said there are several reasons do this, including simple overpromising and underdelivering on promises to investors – but it might also be to avoid scrutiny from those who have targeted the responsible investing space for political reasons.

“As investing sustainably has become contentious in some circles, greenhushing is a way to fly under the radar and escape backlash from those who see sustainable investing as a modern-day example of woke capitalism,” Hall said.

“However, greenhushing is suboptimal, it is important to be transparent about intentions and implementation, green or otherwise.”

Front and centre

An unintended consequence of the focus on greenwashing has likely contributed to the rise of greenhushing, which is the antithesis of greenwashing.

Greenwashing is has taken centre stage in the regulatory environment, with the corporate regulator stating it is one of the key enforcement areas this year. The latest development in greenwashing enforcement is ASIC’s federal court claim against Mercer Superannuation over alleged greenwashing of fossil fuels, alcohol, and gambling – the first court action the regulator has pursued over greenwashing.

The regulator alleged that Mercer invested in almost 50 businesses exposed to industries it claimed to exclude. Last year Vanguard self-reported an issue to ASIC, resulting in a $40,000 fine, and has since been addressed.

“These cases follow ASIC’s intention, flagged back in 2022, to review investment funds and determine whether they live up to their green claims,” Hall said.

“The Australian Competition and Consumer Commission [ACCC] also flagged that it would be focusing on environmental, social, and governance claims under Australian Consumer Law.”