Beyond greenwashing and greenhushing: Are we finally entering the green implementation era?

Even as companies grapple with the pressures of pending regulations and the backlash against ESG initiatives in the US, a palpable shift is underway. A new era of ‘Green Implementation’ is taking shape, spurred on by the very rules that have made companies cautious about publicizing their climate targets in the short term.

Following the Paris Agreement, a wave of corporate net-zero pledges swept across the globe. As of June 2023, over 9,000 companies had committed to achieving net-zero emissions by 2050 as part of the UN Race to Zero campaign. This surge in voluntary commitments filled a critical gap, especially in the US, where government action lagged. Achieving national climate targets, after all, often hinges on corporate action, given the significant share of global emissions corporations are responsible for.

Many of these commitments have translated into actual emissions reduction efforts. According to the Science Based Targets initiative (SBTi), companies with approved science-based targets collectively reduced emissions from their operations and energy consumption by 12% in 2020 alone.

However, the need for robust anti-greenwashing regulation was critical. A former executive of a sustainability-leading company expressed frustration to me. “We aimed to set a standard for responsible corporate behavior with significant commitments. Yet, many that also made bold pledges failed to put in the necessary effort to turn these ideas into impact,” they said.

In many cases, there was no deterrent against misleading the public. While voluntary frameworks like those offered by the SBTi aimed to provide a way to distinguish genuine climate action from greenwashing, it’s often hard for consumers and the public to tell the difference. Despite occasional investigative reports, companies frequently make grand claims about aligning with 1.5C without facing consequences.

To be fair, not all companies were necessarily acting in bad faith, but there was a degree of recklessness. Some made commitments without knowing exactly how they would turn targets into action.

Many neglected to establish near-term targets, especially for Scope 3 emissions, to put them on a credible path to achieve long-term goals. In other cases, C-suites and boards didn’t grapple with the complexity and cost of achieving ambitious targets. As a result of such carelessness, a crisis of implementation, and of public trust, appeared to loom large on the horizon.

In response, jurisdictions worldwide have begun implementing rules to penalise companies that make false claims. For example, the EU’s Green Claims Directive will ban potentially misleading terms like “environmentally friendly”, “climate neutral”, and “climate positive” from 2026 onwards.

Some advocates fear that such rules have ushered in a new era of ‘greenhushing,’ where companies are too fearful to talk about climate commitments for fear of using the wrong words or being called out, potentially slowing the pace of action. However, these fears are misplaced.

Yes, in the short term, companies may take longer to vocalise targets due to the fear of legal liability if their claims are not reflective of reality.

Yet, this threat of legal exposure may also motivate companies to focus on decarbonising their supply chains, lest they fall under the scrutiny of new regulatory schemes over what they’ve already pledged to do.

As the chief sustainability officer of a prominent public company recently told a colleague: “At this time, we are very focused on the key initiatives that will reduce our company’s carbon footprint, and that is where we are investing. It is less on broad public action/engagement on climate.” Arguably, if such sentiments are genuine, they could lead to lofty rhetoric being turned into action.

Furthermore, the notion that companies might cite regulations as an excuse for inaction or shy away from strong decarbonisation commitments is unlikely to stand over the long term. The wave of new regulations includes pressures for companies to take action. For example, upcoming SEC rules in the US will demand that public companies report on climate risks, emissions, and their net-zero strategies, if they have such goals. Just revealing their emissions footprint could spur public pressure on companies seen as polluting excessively.

Additionally, in Europe and the UK, tougher disclosure laws are pushing big companies to produce plans on how they will cut emissions and set real goals. The UK, for instance,  mandates certain firms to report on climate risk in line with theTask Force on Climate-related Financial Disclosures (TCFD). A climate transition plan mandate is also in the works. And even the US is looking to make it mandatory federal contract seekers of a certain size to adopt science-based targets to reduce their emissions.

In response to increasing scrutiny over supply chain emissions, giants like Amazon are also pushing suppliers to disclose emissions, aim for reductions, and track progress. Thanks to these combined forces, the momentum for setting climate targets continues to grow. The proof is in the numbers: SBTi-validated targets soared to 5,137 companies by April 2024, up from 2,079 in 202

Beyond value chain mitigation

Companies will also see heightened pressure to financially contribute to climate mitigation efforts beyond their value chains. Climate action isn’t an “either/or” proposition. While reducing reliance on fossil fuels is crucial, companies can also help address issues like illegal deforestation and contribute to the overall residual climate mitigation financing gap.

The silence on so-called Beyond Value Chain Mitigation (BVCM) by frameworks like SBTi in the past has been linked to the low adoption of carbon credits, critical for funding deforestation and carbon removal efforts. For instance, in 2022, less than 12% of companies disclosed to CDP reported purchasing carbon credits, and less than 1% of those with science-based targets invested in long-lasting carbon removal credits.

Thankfully, the SBTi now promotes measures that contribute to BVCM, like the buying of high-quality carbon credits. Additionally, new standards, like equitable earth, and laws, like California’s AB 1305, will play a vital role in ensuring these carbon credit systems truly benefit the environment and support communities most affected by climate change.

Certainly, questions remain over how carbon credits can be used, with some arguing they should be allowed to be used to offset hard-to-abate Scope 3 emissions. Nonetheless, corporate adoption of BVCM measures, if done correctly, will complement, rather than postpone, the urgent task of decarbonising corporate operations and supply chains to achieve global climate goals. Reports indicate that if each Fortune 500 company purchased high-quality carbon credits equivalent to the value of their unabated emissions, they could collectively contribute $25bn annually to climate mitigation efforts. This amount reportedly represents just 1.5% of their combined corporate profits. Meanwhile, the annual cost to combat illegal deforestation stands at $15bn.

With the introduction of these new regulations and frameworks, we’re leaving behind the unchecked era of corporate climate claims. While we may temporarily face a period of “greenhushing,” it’s a fleeting phase. The regulations and incentives behind this shift are clearing the path for a new era of meaningful and effective environmental action.

Yes, regulations have their shortfalls. For example, SEC proposed regulations do not cover Sope 3 emissions, and many regulatory schemes focus on the risk climate change poses to businesses rather than businesses’ impacts on the environment. Moreover, accusations of “greenwashing” that extend to other “green” actions, like recycling, that should be subject to greater oversight. But, in the end, there’s only one direction for businesses to head, and the path forward is unmistakable.

Michael Sheldrick is a policy entrepreneur and a driving force behind the efforts of Global Citizen. As a Co-Founder and Chief Policy, Impact, and Government Affairs Officer, he leads the organisation’s campaigns to mobilise support from governments, businesses, and foundations.

With a career that spans the world of pop and policy, Michael has worked with an impressive roster of international artists such as Beyoncé, Coldplay, Lady Gaga, Miley Cyrus, as well as prominent political leaders including Canadian Prime Minister Justin Trudeau. His book, From Ideas to Impact: A Playbook for Influencing and Implementing Change in a Divided World, will be published by Wiley on 16 April 2024.