No matter how smoggy the horizon, it’s clear to see that more US regulations on carbon emissions disclosure are inevitable. Make no mistake: the forthcoming SEC rules on climate disclosure are just the start. Look to the development in regulations and mandatory disclosure in Europe over the past 10 years, look at the evolution of SASB into the International Sustainability Standards Board. You don’t need to be Nostradamus or Carnac the Magnificent to anticipate that a more meaningful crackdown on corporate emissions and operating impact is coming in the US because of the continued reality of limited or misleading disclosures on climate and sustainability from corporations.
The lack of transparent disclosure goes by different names, like ‘greenwashing’ and ‘greenhushing’. Various institutions and organizations have slightly different definitions and interpretations of these terms (which is a whole other issue) but we can boil them down to this: greenwashing is misleading disclosure and greenhushing is a lack of disclosure. Both actions are logical (albeit suboptimal) responses to a marketplace demanding action but without real forms of accountability.
Greenwashing can take subtle forms – think of your professionally written sustainability report that highlights public relations activities but downplays or ignores a company’s supply chain – but it can also potentially be blatant or even fraudulent. Other companies might decide the discourse around the climate, from whichever political direction, has become so potentially damaging that it’s wiser to just stop reporting good news and bad news altogether, known as greenhushing.
So what should companies do? ‘I skate to where the puck is going to be, not where it has been.’ This quote is often attributed to hockey great Wayne Gretzky and applies here. Companies can wait for onerous regulations to come down the pipeline before spending millions racing to get up to speed and compliant, or they can cross their fingers and hope revenue won’t decline if consumers and investors decide to abandon them if/when they are accused of greenwashing or greenhushing. Or they can act now.
The companies that make a credible, transparent green commitment now, at the board level, and successfully cascade environmental and sustainable thinking into all their strategic and tactical levels, will be better positioned to win over consumers, show investors they can identify and better address risks and confidently provide demonstrable proof – data – that they are neither greenwashing nor greenhushing.
If I had a crystal ball, I’d predict that the companies that get serious about strong green governance will be skating to where the puck will be and will avoid the headaches that come with trying to play catch-up as new regulation arrives on the scene. They will also likely enjoy the success and growth of the companies that got a jump-start on digital transformation early on in the 1980s and 1990s, becoming the blue-chip, multi-billion-dollar companies we all know and love.
To learn more about integrating strong green governance into a company for long-term success, and to better understand the financial opportunities of the green economy, visit the Green Impact Exchange to learn more. Tomorrow’s blue chips will be green.
An article by Alex Kontoleon, chief strategy officer of Green Impact Exchange.