Greenhushing good for financial performance, find academics 

Study suggests shareholders reward companies that keep quiet about their environmental efforts

A new study has concluded that corporate greenhushing is good for returns.

Researchers from universities in the US and UK compared the environmental behaviour of companies against what they told their investors between 2005 and 2021, and then assessed the effect on financial performance.  

“We measured the communications from earnings‐call transcripts to see what managers were communicating about these environmental factors, and contrasted it with data from Value Labs, which is basically a proxy for external conduct,” explained Sonam Singh, an assistant professor of marketing at the Muma College of Business in Florida, and one of the authors of the paper. 

Value Labs is an ESG provider, and the researchers focused on its data relating to companies’ environmental actions, outcomes and policies. 

Significant gaps between the external data and the communications from management point to either greenwashing or greenhushing, depending on which one is greater. 

“If the company’s external assessment yields a better score than what’s being communicated in an earnings goal, it means the company is greenhushing,” Singh said. 

“They’re being strategically silent about some of the initiatives we know they’re doing.”

The academics then examined the relationship between this perceived greenhushing and the cumulative abnormal returns (CAR) – overall divergence between expected returns and actual returns – that occurred in the three months after the earnings call. 

“A one SD [standard deviation] increase in Greenhushing Tendency (SD = 1.27) is associated with a 2.29 percentage point increase in three-month CAR (0.018 x 1.27 = 0.023), translating to about $238m in market value for the average sample firm,” the paper concludes. 

Singh said the findings suggested “there is a value to silence”.