Time to stamp out greenwashing and greenhushing

As regulators continue to crack down on greenwashing activity, organisations are shifting away from green marketing in a bid to avoid legal risks, but at what cost?

This month, super giant Mercer was found to have made misleading greenwashing claims by the Federal Court. picture: Zoe Phillips

As the northern hemisphere sweltered through its hottest summer on record, the increasing frequency and intensity of extreme weather events – wildfires, floods, severe storms, droughts and heatwaves – reaped a devastating toll on millions of people.

For these people, there is no doubt our climate is changing, as their lived experiences trumped the often obscure and absurd political debate over the validity of overwhelming scientific evidence.

So, how are we doing so far? Not that well.

The Paris Agreement Goal was to keep global temperature increases to 1.5C above pre-industrial levels. Based on current real-world policies and action, it is projected that global temperatures will increase by 2.7C by the end of the century.

To put this in context, that means more destructive extreme weather events, but also the runaway melting of ice caps, sea level rises, displacement of billions of people, global food insecurity, further scarcity of freshwater and widespread diversity loss.

If we want to move to a low-carbon sustainable future, it will require economy-wide behavioural change – at scale – from consumers, business and governments.

And to build momentum and inspire change, we need to be able to have a conversation about what individuals and organisations are doing that can help us realise this future.

To make that happen, we need to stamp out greenwashing and greenhushing.

Greenwashing is misleading the public to believe you are doing more to protect the environment than you really are. It distracts from the credible action people are taking and undermines trust.

Conversely, greenhushing is when companies deliberately downplay or withhold information about their environmental or sustainability actions to avoid criticism or regulatory intervention.

While some brands are willing to shine a light on the good they are doing for people and the planet, increasingly many are retreating into the dark because of real and perceived concern about consumer retaliation and regulator retribution.

Greenhushing is a real thing. Just last week, I spoke to a senior executive at a large financial institution who said they would love to talk about all they do in helping businesses and the economy transition to a low-carbon future, but the legal and risk teams told them to keep their heads down.

Unfortunately, this story is common.

The shift away from green marketing is happening just when consumers are more driven by sustainable and environmental issues in their purchasing decisions than ever before.

This year, a Simon-Kucher study found that 64 per cent of consumers rank sustainability as a top-three purchasing consideration.

The problem is YouGov found last year that 60 per cent of consumers are sceptical about green claims made by brands.

At the same time, affordability is still a considerable barrier, leading to an often cited say-do gap where consumers say they want to buy sustainable goods but don’t actually follow through where the premium is too much.

Kantar’s 2023 Sustainable Sector Index found an average of 81 per cent of consumers across sectors say they want to live a sustainable lifestyle, yet only 29 per cent report they are actively changing their behaviour.

This leads to two perplexing paradoxes. Consumers want to buy from sustainable companies but don’t trust the claims they are making, and consumers want to purchase sustainable goods but are not willing to change their behaviour and pay much more to do so.

To have the conversation we need to inspire behavioural change, we need to build trust with consumers around environmental claims, and we need to establish clear standards and guardrails for business to give them the confidence to make those claims.

For many businesses this starts with a shift away from “ego marketing”, where the only role for consumers is to clap from the sidelines as companies pontificate about all the good they are doing to save the planet. Instead, talk about the consumer benefit and the product’s benefits. Talk about how your products and services will help consumers be more sustainable.

Transparency is critical and the new mandatory climate reporting regimen that passed parliament on September 9 will help build consumer trust in organisations by shining a spotlight on an area that has operated in the shadows for too long. It is reassuring that ASIC has committed to a pragmatic and proportionate response to enforcing these new requirements.

The marketing and media industry has an important role to play in leading the behavioural change necessary for Australia to transition to a sustainable future. Part of that is setting the standards and raising the bar when it comes to advertising and marketing.

The Australian Association of National Advertisers is in the final stages of a review of the Environmental Claims Code to ensure that it reflects community standards and international best practice. The new code will be launched in coming months.

We also recognise the need to clean up our back yard, so next month we are launching the Australian Chapter of Ad Net Zero to inspire industry-wide action and drive systemic change.

Amid the escalating climate crisis, we need to spark the conversations that will drive large-scale behavioural change.

Greenwashing and greenhushing are stifling these discussions. We must do everything in our power to rebuild consumer trust while empowering the voice of businesses so we can confidently walk the path to a more sustainable future together.

Josh Faulks is chief executive of the Australian Association of National Advertisers.