You’ve heard of “greenwashing” — when a company makes misleading claims about the environmental benefits of their products, services or initiatives — but what is “greenhushing”? And why is the financial sector particularly susceptible to it?
Why Greenhushing Is So Appealing to Banks
Let’s define our terms.
Greenhushing is when a company withholds information about its environmental efforts.
At first glance that may seem… counterintuitive.
Especially when you consider that more than 65% of consumers say they would like every financial service they use to be sustainable. As Sven Denecken, SVP for SAP Industries & CX, concludes in an interview with Forbes: “The consumer landscape is evolving, with a growing emphasis on sustainability, conscious consumption, and ethical practices.” To prove the point, many banks have made Net Zero pledges, provided green finance offerings and in some cases, even built their entire brand around sustainability. Triodos takes full advantage of the “green evolution”, having been named as a leader in climate responsibility and proudly advertising £20.1bn assets under management directed towards positive impact.
Evidently, banks stand to gain considerable competitive advantage from aligning sustainable strategies with eco-consumer trends.
Yet some are choosing to downplay their sustainable credentials.
Why?
Spoiler: it has nothing to do with being humble and everything to do with risk avoidance.
Beware Easy Answers
Financial institutions gravitate toward strategies that appear to minimise risk, by default. This is where greenhushing comes into play, offering an easy answer to a complex issue.
The trouble is, easy answers may seem appealing, but they rarely solve the problem and can actually make the situation worse by hiding the truth.
For example, banning plastic straws was an easy answer to ocean pollution. But, it turns out they make up just 0.025% of plastic waste in the Great Pacific Garbage Patch, while fishing nets account for 46%. The real issue — industrial plastic pollution — has been overlooked in favour of a simple, feel-good solution.
Like the straw ban, greenhushing is not going to make complex problems go away. And using greenhushing to avoid risk can have long-term impacts. Planetary Solvency: Risks and Recommendations is the IFoA’s fourth report in collaboration with climate scientists. It finds the global economy could face a 50% loss in GDP between 2070 and 2090, triggered by global warming and “tipping point” events. When we talk about risk, we talk about it in this context.
As you can probably tell already, we’re not huge fans of greenhushing. However, because we understand this really is a complex issue, here are a few of those problems banks are attempting to fend off:
1) Greenwashing Accusations
Yes, greenhushing is seen as a way for companies to avoid accusations of greenwashing.
More often than not, greenhushing is a knee-jerk reaction or an over-cautious preventative measure in the face of greenwashing accusations. The thinking is if you don’t promote your sustainability efforts, then you won’t be held to account by the court of public opinion. You can fly under the radar. (At least, for a while.)
Recently, the Make My Money Matter movement in the UK has called on authorities to investigate banking giants for potential greenwashing. The main accusation is that these banks are paying lip service to sustainable action while continuing to fund polluting industries, all while underreporting portfolio emissions.
“Banks that are the most polluting are also the most wary of doing any customer-facing sustainability exercises. Instead, they’ll focus on things like recycled plastic cards or sponsoring charities, but they won’t touch the bigger conversations around their portfolios or financed emissions — because that’s where the real scrutiny would be.”
— Oliver Malmed, EMEA Lead at Connect Earth
If greenwashing is overreporting on stuff that doesn’t really matter (while hiding inaction on the stuff that does), then greenhushing is underreporting on everything, even actions that have a genuine impact. Frankly, this doesn’t serve banks, their customers, or the planet either. It’s an overreaction to criticism. We’d say, rather than responding to accusations of falsehood with silence — isn’t it better to tell the truth instead? We’ll return to this subject at the end.
2) Politicised Minefields
Across the pond, you only have to look at recent events in Texas and the litigation-fuelled mass exodus of banks from organisations like the Net Zero Banking Alliance to see the impact of politics on banks’ ESG decision-making. In the US, with Trumpism surging, banks are perhaps more likely to pull back from sustainability commitments. Globally, it’s difficult to separate decarbonisation from politics. Where under one administration the risk of non-compliance with sustainability regulation is the more pressing concern, under another, that risk turns on its head.
What we are seeing in our conversations at Connect Earth is a distinct regional variation. Many banks are in fact continuing to progress sustainability initiatives regardless of politics, but how overt or covert they are depends on the socio-political sentiment of the region.
But is silence really the safest route? By opting out of the conversation, banks try to avoid alienating segments of stakeholders, investors and customers that view the climate crisis as a political issue and not a humanitarian one.
The risk we see is twofold. 1) Customer perception is not a monolith. Many customers do expect banks to be responsible and to operate sustainably. This audience doesn’t appreciate flip-flopping and will switch to providers that align with their values. 2) Without bold voices standing up for the long-term good of the planet, other voices gain traction.
3) Making Bad Decisions
Some banks worry that public ESG disclosures might limit their flexibility in decision-making, particularly if they finance carbon-intensive industries. Keeping sustainability efforts private allows them to prioritise financial priorities without attracting external pressure. In the short term the most environmentally sustainable decisions are not always the most financially viable, after all.
In the long-term, however, values-aligned decisions that prioritise sustainability can reduce regulatory risks, enhance brand reputation and future-proof business models against the growing financial impacts of climate change. Ultimately, that external pressure — regulators, the public eye — helps to balance the books, creating an even playing field for all banks to make decisions that benefit both the bottom line and the planet.
4) Highlighting Inaccuracies
Many banks struggle with accurate, verifiable ESG data. Without reliable measurement frameworks, they may choose not to disclose sustainability efforts rather than risk incomplete or misleading reporting. Of course, with the EU’s CSRD and other regulations, that choice is no longer on the table. Many banks have to disclose.
Rather than withhold this information, we say: use this critical period of regulatory transition to its maximum competitive advantage. Scope 3 emissions in financed activities accounts for the vast majority of banks’ carbon emissions. So, by being super transparent with these emissions in particular, you can have a huge impact. The bank that uses the best carbon data (hint hint) available, and that shares that crucial information with customers, is going to come out ahead when other banks choose to be silent.
“Banks will say they need to get their own house in order before they can tell their customers to do the same by sharing transaction-based carbon emissions data. The truth is, their impact isn’t in office emissions or employee commutes, it’s in the 20 million customers they finance. If they focused on reducing that, the difference would be massive.”
— Oliver Malmed, EMEA Lead at Connect Earth
A Better Path Forward: Green Transparency
As we mentioned earlier, our take is that banks seeking to avoid risk and criticism should choose truth over silence. The truth will out, as they say. And the truth is, to mitigate climate risk, the emphasis must be on progress and less on perfection.
Banks may not have a perfect green record. We’d argue they don’t need one to take sustainable action or to talk about and celebrate that action. A step in the right direction is worthy of that celebration, so long as it’s:
- genuine (we can’t help you if you are actually guilty of greenwashing);
- communicated in the context of an ongoing journey with clear timelines;
- aligned with a values-oriented decision-making process; and
- linked to tangible plans for further action.
Just like in the home, people may be meticulous recyclers yet at the same time have an inefficient home energy system. What matters is the action that is being taken. What matters is the savings jar labelled “heat pump”. What matters, again, is progress, not perfection.
Banks that opt for Green Transparency over Greenhushing own the areas that need work and openly communicate why certain decisions are being made, all while committing to tackling problems head on.
Silence encourages inaction, invites distrust and stalls momentum towards a sustainable future.
Those tough, honest conversations are where real progress happens.