AUSTIN, Texas—New research suggests that almost six in 10 (58 percent) of the top 100 largest public and private U.S. companies are responding to greenwashing concerns by keeping quiet on genuine ESG (environmental, social and governance) progress. With global ESG assets surpassing $30 trillion in 2022 and 85 percent of investors reporting that ESG assets lead to better returns, companies that remain quiet may be missing out on potential investment opportunities and consumer demand, according to the Transparency Index 2024 report, published by data insights company Connected Impact and data science consultancy Ringer Sciences.

The report reviewed more than 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 report’s findings reveal that only 2 percent of U.S. companies “over-promoted” their ESG progress, with 58 percent “under-promoting” their progress and disclosing more factual data on ESG than was 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, the report said. This puts these companies 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, according to the report.

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 percent) 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 percent of companies disclosing more on emissions than they communicated. While governance had the smallest gap, with 40 percent of companies having a gap between their ethics disclosures and communications.

Dr. Walton added, “ESG transparency is currently a missed opportunity for the top 200 businesses in the U.K. and U.S. We know most consumers favor responsible brands and transparent businesses. We know a well-governed transparent business attracts more investment and top talent. 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.”