Why is ‘greenhushing’ on the rise?

  • 19 February 2024
  • Blog | Green Finance | Blog

As sustainability and environmental concerns increasingly take centre stage, the term ‘greenhushing’ has emerged to describe a new phenomenon taking hold across the banking sector. It refers to the deliberate underplaying or downplaying of a bank’s sustainable and environmentally friendly initiatives – amid concerns that drawing attention to some positive actions may also highlight their less-positive activities. 

There are other factors contributing to the rise of greenhushing in banking, however, drawn from a complex interplay of economic, regulatory, and strategic considerations. So, what exactly is driving the rise in greenhushing? 

1. Risk Aversion: Banks are, understandably, traditionally risk-averse institutions. As a result, they are cautious about openly promoting their green initiatives due to uncertainties surrounding the long-term viability and profitability of sustainable practices. In short, fears of negative financial impacts or potential backlash from shareholders could be leading banks to downplay their environmental efforts. 

2. Regulatory Uncertainty: The evolving landscape of environmental regulations poses further challenges for banks. While there is a growing emphasis on sustainable finance and green investments, regulatory frameworks are still in flux. Banks may therefore be hesitant to publicise their commitment to sustainability until regulatory standards are more clearly defined, reducing the risk of non-compliance. 

3. Greenwashing Concerns: Greenwashing, or the deceptive marketing of a company's environmental practices, has led to increased scrutiny from consumers and regulators. Banks will likely be wary of being perceived as insincere or opportunistic in their green endeavours. Greenhushing may be serving as a protective measure for avoiding accusations of greenwashing. 

4. Competitive Dynamics: Amid an intensely competitive banking landscape, institutions may also be engaging in greenhushing to maintain a strategic advantage. By quietly integrating sustainable practices into their operations without overtly publicising them, banks could gain a competitive edge without attracting undue attention from rivals. 

5. Investor Scepticism: Despite the growing interest in sustainable investments, some investors remain sceptical about the financial returns associated with green initiatives. Banks, seeking to appeal to a wide investor base, may be downplaying their sustainability efforts to avoid alienating investors who prioritise immediate financial returns over long-term environmental impact. 

6. Cultural Shift Challenges: Implementing a cultural shift towards sustainability requires time and resources. Banks may be reluctant to openly communicate their internal challenges, fearing negative public perception or potential scepticism from stakeholders. Greenhushing may be serving as a protective measure until substantial progress is achieved. 

7. Focus on Core Competencies: Some banks, meanwhile, may be concentrating on their core competencies and financial services rather than positioning themselves as environmental champions. Greenhushing allows these institutions to incorporate sustainability into their operations without diverting attention away from their primary business functions. 

The rise of greenhushing in banking can likely be attributed to a combination of risk aversion, regulatory uncertainty, concerns about greenwashing, competitive dynamics, investor scepticism  cultural shift challenges, and a focus on core competencies. As the banking industry grapples with the complexities of integrating sustainability into its practices, the phenomenon of greenhushing reflects a nuanced approach to balancing environmental goals with the pragmatic considerations of a dynamic and competitive financial landscape. 

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