Two-thirds of US’s 100 biggest businesses “avoid greenwashing” by keeping quiet on ESG
09 July 2024 - 11:00PM
Business Wire
- New research finds almost six in ten (58%) of the top 100
largest public and private US companies are quietly disclosing
their ESG progress but not communicating it to the public – putting
them at risk of “greenhushing”.
- With 85% of investors believing the $30 trillion of global ESG
assets bring better returns – businesses that keep quiet are
missing out on investment.
- But businesses that are transparent on their ESG progress can
drive investment and gain credibility with consumers.
New research suggests that almost six in ten (58%) of the top
100 largest public and private US companies are responding to
greenwashing concerns by keeping quiet on genuine ESG
progress.
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the full release here:
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Photo (L to R) – Garrett Bond (Senior
Director of Analytics, Ringer Sciences), Dr Lucy Walton (CEO,
Connected Impact) and Taylor Schott (Senior Manager – Analytics,
Ringer Sciences), who conducted the report research. (Photo:
Business Wire)
With global ESG assets surpassing $30 trillion in 2022 and 85%
of investors reporting that ESG assets lead to better returns1,
companies that remain quiet may be missing out on potential
investment opportunities and consumer demand2.
The Transparency Index 2024 report, published by data insights
company Connected Impact, and data science consultancy Ringer
Sciences, reviewed over 600,000 corporate communications from 200
companies to identify the “transparency gaps” between what
businesses communicate on social media about ESG topics, and what
they factually disclose about their targets and performance in
annual reports, websites and other corporate documents.
The findings reveal only 2% of US companies “over promoted”
their ESG progress, with 58% “under promoting” and disclosing more
factual data on ESG than promoted. In a climate of stringent
regulatory scrutiny, where mistakes can result in fines and
reputational damage, companies may be hesitant to promote their
legitimate ESG credentials due to fears of greenwashing
accusations. This puts them at risk of “greenhushing” – where
organizations choose not to publicize details of their climate
targets, or their plan to reach their targets, to avoid scrutiny
and allegations of greenwashing.
Dr. Lucy Walton, CEO of Connected Impact, said:
“Businesses are under increasing pressure to avoid greenwashing –
with increasing regulations and potential fines for those who
misrepresent their legitimate ESG efforts.
“But businesses must also take action to avoid ‘greenhushing’.
Our data reveals that businesses are more likely to under-promote
than over-promote their ESG initiatives. This cautious approach can
deter investment and undermine credibility.”
Only four in ten (40%) of companies offered a “balanced”
picture, with a minimal transparency gap. The report argues that
businesses with a small gap are more trustworthy than their peers.
The report examined emissions, ethics, diversity and inclusion
topics to represent E, S and G criteria. Emission disclosures had
the largest gap, with 67% of companies disclosing more on emissions
than they communicated. While governance had the smallest gap, with
40% of companies having a gap between their ethics discloses and
communications.
Dr. Walton added, “ESG transparency is currently a missed
opportunity for the top 200 businesses in the UK and US. We know
most consumers favor responsible brands and transparent businesses.
We know a well-governed transparent business attracts more
investment and top talent3. This report equips businesses to
identify – and close – transparency gaps so we can all make better
decisions about where to invest our money, time and attention.”
Notes to
editors
Connected Impact Connected Impact is a data insights
company which provides businesses with actionable analysis of ESG
disclosures, communications and performance to equip them to better
navigate reporting complexities and build stakeholder trust.
Ringer Sciences Ringer Sciences is a data science and
analytics consulting firm that works with companies of all sizes
and across industries to help them leverage data to make informed
business decisions backed by research. Using a combination of
real-world, social, and third-party data sources, we arm our
clients with actionable insights and prescriptive recommendations
for immediate impact and outline future opportunities tailored to
their specific business goals.
References
Figure 1
US
Balance
Total Transparency Gap
Sum of disclosure and
Communication gap
“Over
promotion”
Disclosure gap
“Under promotion”
Communication gap
E
28%
72%
5%
67%
S
33%
67%
1%
66%
G
60%
40%
0%
40%
Average
40%
60%
2%
58%
UK
Balance
Total Transparency Gap
Sum of disclosure and
Communication gap
“Over
promotion”
Disclosure gap
“Under promotion”
Communication gap
E
32%
68%
5%
63%
S
28%
72%
1%
71%
G
45%
55%
1%
54%
Average
35%
65%
2%
63%
Methodology
The Transparency Index 2024 report, published by data insights
company Connected Impact and data science consultancy Ringer
Sciences, reviewed over 600,000 LinkedIn and Twitter posts as a
proxy for external communications from the FTSE 100 and the top 100
largest public and private US companies using publicly available
revenue data.
This report analysed emissions data to represent ‘Environment’,
diversity, equity and inclusion data to represent ‘Social’, and
ethics data to represent ‘Governance’.
For the disclosure analysis, analysts reviewed over 90 mandatory
and voluntary sustainability related disclosures. The disclosures
were assessed by reviewing information available on the selected
company's corporate and investor relations website pages and
embedded documents such as sustainability reports, annual reports
and ESG data books.
For the social media analysis, analysts sampled 22,718
English-language LinkedIn posts and 580,664 English-language X
posts from the UK’s FTSE 100 and the top 100 largest public and
private US companies with active accounts in 2023. These were
organic posts, not LinkedIn promotions or engagements.
Connected Impact’s patent-pending methodologies were then used
to analyse sampled data. Transparency was calculated by quantifying
the balance and alignment between communications and disclosures. A
transparency gap is defined as the quantified difference between a
company’s factual disclosures on a particular topic and the
company’s commentary or communication on the same topic.
Transparent communication proportionately aligns the quantity and
quality of qualitative content on a topic, with detailed and
evidenced quantitative disclosure on the same topic.
1
https://www.bloomberg.com/company/press/global-esg-assets-predicted-to-hit-40-trillion-by-2030-despite-challenging-environment-forecasts-bloomberg-intelligence/
2
https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/consumers-care-about-sustainability-and-back-it-up-with-their-wallets
3
https://medium.com/swytch/new-study-shows-employees-seek-and-stay-loyal-to-greener-companies-f485889f9a7f
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version on businesswire.com: https://www.businesswire.com/news/home/20240709169203/en/
Media: Dan Childs dan.childs@nsg-global.com