From greenwashing to greenhushing — Dalilawati Zainal

Malay Mail

30-05-2025

MAY 30 — In the race to appear green, are Malaysian companies saying too much or not enough?
Sustainability is no longer a voluntary aspiration. It has become a business necessity. As climate risks, social inequalities and governance failures dominate global markets, companies face increasing pressure to show both performance and purpose. In this context, Environmental, Social and Governance (ESG) reporting has emerged as a foundation of corporate transparency and investor trust.
Yet, ESG's rise has also given way to two concerning practices that weaken disclosure integrity. Greenwashing refers to overstated or misleading claims about sustainability efforts, while greenhushing involves withholding genuine ESG progress to avoid external criticism. Both distort market signals, reduce ESG data credibility and impede informed decision-making.
While greenwashing inflates ESG performance to attract capital or polish image, greenhushing conceals achievements, limiting corporate visibility and undermining investor confidence. Globally, regulators and investors are paying closer attention on these practices.
While greenwashing inflates ESG performance to attract capital or polish image, greenhushing conceals achievements, limiting corporate visibility and undermining investor confidence. Globally, regulators and investors are paying closer attention on these practices. — Richard Bell/Unsplash pic
A 2022 analysis by Planet Tracker flagged widespread issues in corporate sustainability claims, many of which were vague or unsupported. That same year, South Pole's Net Zero survey found that one in four companies working on climate targets chose not to disclose their progress. This fragmented global reporting landscape fuels both practices, making it harder for stakeholders to assess ESG risk accurately.
Malaysia's ESG ecosystem is evolving, but challenges remain. Before the introduction of the National Sustainability Reporting Framework (NSRF), concerns about the quality, consistency and reliability of ESG disclosures were widespread. Organisational drivers encouraged greenwashing, particularly among companies seeking ESG-focused investment or reputational advantage. Weak enforcement mechanisms allowed such practices to continue with limited consequences. Several Malaysian companies have already faced public scrutiny for questionable ESG claims, suggesting these issues are more prevalent than acknowledged.
To address these challenges, the government introduced the NSRF, led by the Ministry of Finance and the Securities Commission Malaysia. The framework aligns domestic ESG reporting with international standards such as IFRS S1 and S2 issued by the ISSB. It aims to address both greenwashing and greenhushing by introducing clearer and standardised disclosure expectations. By reducing ambiguity, promoting benchmarking and supporting future assurance requirements, the NSRF is expected to guide companies toward more data-driven ESG communication and improve overall reporting credibility.
However, amid these regulatory shifts, greenhushing remains a quiet but significant risk that the NSRF alone may not fully resolve without complementary measures. Companies, especially in mid-sized or family-owned segments, may still avoid disclosing their sustainability progress out of concern that evolving targets or partial data may attract criticism. This silence reduces comparability across companies and hampers efforts to benchmark ESG maturity at a national level.
The financial implications from these practices are real. Companies associated with greenwashing often face higher debt financing costs, especially smaller and non-state-owned enterprises. Markets are starting to penalise opacity and exaggeration. Meanwhile, greenhushing can block companies from accessing ESG-driven investment, as asset managers increasingly rely on transparent disclosures and third-party ESG ratings.
Addressing these risks will require not only regulatory measures but also professionals who can uphold ESG reporting integrity, especially accountants. Accountants are central to governance, risk management and assurance functions. Their ESG responsibilities now include ensuring that disclosures are accurate, complete and verifiable. In Malaysia, where most ESG reports are unaudited, accountants can play a crucial role in offering independent assurance that builds trust and reduces information asymmetry between companies and stakeholders.
The global momentum toward structured sustainability reporting offers Malaysian professionals a timely opportunity. IFRS S1 and S2 provide a consistent framework to enhance assurance practices. However, the current lack of local standardisation and limited adoption of ESG assurance still enables greenwashing to persist. This highlights the need for regulatory and professional bodies, such as the Malaysian Institute of Accountants (MIA), to embed ESG assurance into the national audit and ethics landscape, supported by professional development and capacity-building.
To turn regulatory progress into impact, Malaysia must adopt a multi-faceted approach. First, regulators should consider mandating third-party assurance for sustainability reports, particularly for listed companies in sectors with material environmental and social risks. This would introduce a crucial layer of accountability. Second, enforcement mechanisms must be clearly defined, with real consequences for material misstatements or omissions. Stronger oversight will be vital to reducing both greenwashing and greenhushing. Third, capacity-building initiatives must target small and medium enterprises (SMEs), many of which lack internal ESG expertise or resources. Finally, alignment with international standards must be reinforced through sector-specific guidance and practical tools to ensure consistent and high-quality disclosures.
Technology also holds promise. Blockchain, ESG data platforms and artificial intelligence (AI)-powered tools can enhance data traceability, detect inconsistencies and strengthen transparency. These solutions benefit both report preparers and users by improving the reliability of ESG information.
Public education and investor awareness are equally important. As ESG criteria continue to influence capital allocation, stakeholders must be equipped to distinguish between meaningful disclosures and mere optics. Informed investors and consumers can exert pressure on companies to uphold integrity in their sustainability claims.
At its core, greenwashing and greenhushing are two sides of the same problem, which is compromised transparency. Both erode stakeholder trust, distort valuations and delay meaningful progress. For Malaysia to lead in sustainable finance and responsible business, ESG disclosures must be grounded in integrity, rigour and accountability.
This shift requires collective effort. Regulators, board members, investors, auditors and accounting professionals all have a role to play in elevating ESG reporting from a compliance exercise to a driver of long-term value. In a business environment shaped by climate risk and stakeholder expectations, the message is clear. Say what you do, and do what you say.
* Dr Dalilawati Zainal is a senior lecturer at the Department of Accounting, Faculty of Business and Economics, Universiti Malaya, and may be reached at [email protected]
** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.