Strategic silence: Why aren't companies talking about their environmental accomplishments?

By W. Chad Carlos and Ben W. Lewis

Over the past few decades, corporations have faced increasing pressures to behave in an environmentally responsible manner. In response, many companies have increased their investments in environmental initiatives and green products in order to differentiate themselves from their competitors and to signal to the general public that they are environmentally-conscious corporate citizens.

Coupled with this pressure, however, is increased scrutiny by environmental activists and the media who seek to hold these corporations accountable and are ever watchful for evidence of environmental hypocrisy, often labeled as “greenwash.”

Although such scrutiny can help interested stakeholders distinguish legitimate initiatives from environmental facades, the risk of backlash associated with being accused of greenwashing has led some firms to stop talking about their positive environmental practices all together.

This phenomenon—firms remaining silent about their positive environmental activities—appears to be increasingly common and has come to be known as “greenhush.” IKEA, for example, has for many years sourced its lumber from forests certified by the Forest Stewardship Council but does little to communicate such efforts to its stakeholders. Likewise, some hotels, have been known to seek out environmental or ecotourism certifications but then refrain from mentioning these accomplishments on their website or in their marketing material.

As scholars of corporate sustainability, we found the idea of greenhush intriguing. Our curiosity drove us to seek deeper understandings of this phenomenon and the factors that might motivate companies to withhold rather than promote their positive environmental activities.

To investigate this issue, we decided to explore the publication patterns of firms that were members of the Dow Jones Sustainability Index (DJSI), a prominent environmental certification intended to identify and recognize sustainability leaders. We searched the sustainability reports, press releases, and other regulatory disclosures for any evidence of companies promoting their achievement in attaining membership in the DJSI from 1999-2014. Our results were published in the Administrative Science Quarterly, a top-tier management journal.

As expected, most firms that achieved inclusion in the DJSI were likely to actively publicize this accomplishment. In fact, many CEOs were vocal in touting their inclusion on the Index as evidence of accomplishing one of their primary strategic initiatives. Our data also showed a broad general increase in the publication rates of DJSI membership over time, which we expect is due to the increased social recognition associated with the certification as it became better known and recognized. In 1999, the year the DJSI was established, only 15 percent of firms publicized their membership. By 2014, that number had increased more than five-fold to 78 percent. Such a pattern would fit the general assumption that firms publicize their goods deeds—especially when observers value those deeds.

Despite this general increase however, we found that firms were less likely to publicize their DJSI membership when it was likely that doing so could lead to perceptions of hypocrisy. We found that firms that were targeted by stakeholders such as environmental activists, or shareholders for some type of environmental misdeed were significantly less likely to publicize their membership in the DJSI.

More specifically, we noticed that many firms appeared to strategically withhold their DJSI membership from public view and that these instances were more likely to occur when the firm had experienced a recent event (e.g. oil spill, environmental lawsuit, etc.) that would call into question the firm’s reputation as a sustainability leader—and appear hypocritical in light of their DJSI membership.

For example, Advanced Micro Devices, a large multinational semiconductor company, achieved DJSI membership for 14 consecutive years and actively publicized this accomplishment in their annual sustainability report except during two-year window in which it was the target of an environmental lawsuit for attempting to build a new corporate campus in an environmentally sensitive area.

Overall, our results suggest that firms were more likely to engage in greenhush when the possibility that they could be detected as a hypocrite and labeled a greenwasher increased. We believe these findings highlight provocative questions for firms interested in communicating their socially responsible practices and for broader stakeholders concerned with environmental issues.

From a strategic perspective, this research speaks to a timely conversation about how companies balance the communication of benevolent acts while simultaneously responding to reputational threats caused by corporate mishaps, particularly in the age of social media where shortcomings are increasingly visible. A prime example of this challenge can be seen in the recent attempt of United Airlines to tout its efforts in supporting veterans. Although these actions were initially applauded, consumers quickly turned against the company when videos surfaced of security guards forcibly removing a passenger from a United flight that was overbooked. As the mistreatment of this passenger went viral, United’s proclamations of helping disabled veterans quickly became fodder for ridicule and the source of Internet memes symbolizing the company’s hypocrisy, which further amplified the negative attention centered on the company.

Although individual firms may be able to weigh the benefits of making their good deeds known against the risks of being perceived as a hypocrite, their decisions also have wider reaching consequences. In particular, by refraining from publicizing prosocial activities, firms may inadvertently stifle the diffusion of socially beneficial practices. Because the spread of socially responsible practices is largely a social process that is influenced by comparison to what other firms are doing, companies that remain silent about their positive actions limit awareness and social pressure for others to adopt similar practices. Our findings thus suggest that policy makers, NGOs, and other activists who are interested in promoting the adoption of socially responsible practices should be careful that their efforts to monitor corporate accountability do not stifle the diffusion of the very practices that they intend to promote.

Strategic Silence: Withholding Certification Status as a Hypocrisy Avoidance Tactic. W. Chad Carlos and Ben W. Lewis; Administrative Science Quarterly XX, 2017 (1–40). http://journals.sagepub.com/doi/full/10.1177/0001839217695089

W. Chad Carlos is an Assistant Professor of Entrepreneurship at the Marriott School of Management at Brigham Young University.

Ben W. Lewis is an Assistant Professor of Strategy at the Marriott School of Management at Brigham Young University.

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