Published June 10, 2018
When nonprofit organizations target companies for environmental missteps, they often aim for industry leaders and household names — businesses likely to get attention from the press and the public.
According to new research, that strategy may come with an unintended consequence: it could stop firms from communicating about their sustainability efforts.
The paper, published recently in Administrative Science Quarterly, examined 18 years of data on thousands of companies from the Dow Jones Sustainability Index, which scores and recognizes the top 10 percent of sustainable firms across a range of industries.
When companies became the targets of threats to reputation, such as boycotts or protests, they became less likely to publicize their inclusion in the index, the paper found. Authors Chad Carlos and Ben Lewis — environmental scholars at Brigham Young University’s Marriott School of Management — call the effect “green hush.”
In part, the effect may be a reaction to a history of rampant greenwashing — businesses making false or misleading statements about how environmentally friendly they are.
“Sanctions for greenwashers can be severe,” Carlos said, damaging reputations and leading to potential sanctions from consumers and other stakeholders. “In response to that, we think we’re seeing this phenomenon where firms are less inclined to talk about the good things they do because they don’t want to be labeled as a hypocrite.”
The Dow Jones Sustainability Index was launched in 1999. As the index became more prominent over the years, so did the ‘green hush’ phenomenon, the researchers found. And because well-known or large firms are more often targeted by campaigns against greenwashing, they were also more likely to go silent when it happens.
If environmental nonprofits’ objective is greater visibility, the approach appears to be working, said Ben Lewis. But if the goal is making businesses more sustainable, the strategy of targeting large firms may be backfiring.
“Green hush could be detrimental to the adoption of sustainability practices,” Lewis said. “When prominent companies like Walmart adopt such practices, that’s when they really take off.”
Lewis and Carlos are members of the Alliance for Research on Corporate Sustainability, a partnership among academic institutions that was launched in 2009 to improve understanding of sustainable business and public policy. Their research was voted best paper at the alliance’s annual conference.
Though the research focused on the Dow Jones Sustainability Index, the findings have implications for other rankings, eco-labels and sustainable businesses in general, the authors said.
“From the business side, it suggests that companies are being strategic in how the communicate their environmentally friendly practices,” Lewis said. “In this age of social media, it seems like every company has a handle that promotes the good things they do. You just need to be sure it’s in line with your practices so you don’t become the target of a boycott or a protest.”
One prominent example is the Volkswagen scandal, Lewis said. After years of claiming to be a leader in sustainability, the automobile company was caught deliberately cheating emissions tests. Lawsuits and multibillion-dollar settlements followed.
“Anything they’ve done in the past in terms of sustainability would now be perceived as less credible given what we know now,” Lewis said.
There are also less egregious examples, including unintentional missteps or situations where suppliers are caught engaged in environmentally or socially damaging practices.
Advanced Micro Devices, a company that builds computer components, was first included in the Dow Jones Sustainability Index in 2002 and remained a member through 2014, the last year examined in the study. In early 2006, they were sued by environmental group Save Our Springs Alliance over a proposed new corporate campus in a sensitive watershed near Austin, Texas. After promoting its inclusion in the index for several years, the company went silent for two years.
The results of this paper appear to be part of a larger trend toward corporate authenticity, Lewis said. As more attention gets paid to social and environmental responsibility, companies are becoming more honest about their performance.
“Even the cleanest oil and gas company is going to have a mishap eventually. Rather than trying to sweep it under the rug, I think owning up to mistakes is probably the best way to deal with it,” Lewis said.
For nonprofit organizations attempting to inspire change, it may be more productive to work with industry leaders rather than stoking outrage that makes them go silent, he added.
Carlos and Lewis’ work was awarded the Outstanding Paper Award in 2016. It can be found by clicking here.
Managing Director, ARCS