The challenge of ESG communication in times of uncertainty

The corporate sustainability report is at a turning point. While European regulation (CSRD, CS3D) has raised the bar for corporate sustainability (even with the simplification introduced by the Omnibus packages), in the United States, the anti-ESG movement is turning these commitments into a risk factor.

BBVA has warned about this in its annual report: the policies of the Trump administration —including the U.S. withdrawal from the Paris Agreement— could create "reputational, regulatory, and financial risks" for companies with ambitious ESG goals. This forces European companies to evaluate what they report and how they report it.

This situation is summarized by the three 'G's —'greenwashing', 'greenwishing', and 'greenhushing'— terms that describe trends in which companies may fall when their communication about sustainability does not align with the reality of their practices.

Much has been said about 'greenwashing', the deliberate exaggeration of the sustainability of an activity or product. And legislation has been introduced in the European Union as part of the Action Plan for the Circular Economy and the European Green Deal (Directive 2024/825 on strengthening consumer power for the ecological transition through better protection against unfair practices and better information, and Directive 2024/1799 to promote the repair of goods).

In turn, the European Securities and Markets Authority (ESMA) published a statement in mid-2025 (Thematic Notes on clear, fair, and non-misleading sustainability claims) aimed at promoting clarity in sustainability claims made by participants in the financial market. This statement outlines a series of recommendations for developing principles that should govern all disclosed information: accuracy, accessibility, justification, and timeliness. And although it is primarily addressed to specific audiences, its recommendations apply to markets in general.

On the other hand, 'greenwishing' reflects a predisposition towards sustainable action without the real capacity to carry it out; that is, companies that make ambitious commitments without the resources or structure to fulfill them. In the words of Professor Carmen Valor, "sustainability is not an aesthetic, nor a narrative, nor a set of well-chosen visual signals. It is a matter of measurable impacts, verifiable processes, and real commitments".

Finally, the most recent and perhaps the most prevalent today is 'greenhushing'. This involves hiding or downplaying real progress in environmental and social sustainability for fear of scrutiny or political pressure. According to the report *The Voice of Purpose: ESG Communication, Authenticity and Trust*, produced by the IE-Elecnor Knowledge Hub on Ethical Business in collaboration with Professor Martina Pasquini, companies that communicate clearly, focus on a limited set of issues, and support their messages with verifiable information are perceived more positively than those resorting to excessively broad or grandiose narratives. In other words, clarity generates verifiability, verifiability fosters trust, and trust leads to a perception of authenticity.

What is the current situation of Spanish companies? According to data from the report 'Communicating Progress: Analysis of ESG Reports 2025', developed by the United Nations Global Compact in Spain, 78% of participating companies state that their senior management regularly reviews ESG risks, and 100% of IBEX 35 companies have established due diligence processes. However, there are still some significant gaps: only 13% of Spanish companies link their executives' remuneration to human rights criteria and 20% to environmental criteria. Moreover, 32% of Spanish companies (43% in the case of SMEs) do not produce sustainability reports under any recognized framework.

These figures seem to suggest that the risk for many Spanish companies is less about 'greenwashing' and more about 'greenwishing', that is, ESG commitments that exist on paper but do not have the necessary infrastructure for monitoring, verification, and governance to be credible. On the other hand, especially in the context of pressure against ESG criteria in the United States (where the SEC is moving to dismantle its own climate disclosure rules), 'greenhushing' may seem like a survival strategy.

However, the aforementioned report from the IE-Elecnor Knowledge Hub on ethical business concludes that resorting to “greenhushing” is a mistake, as expectations for transparency grow, ambiguity is met with increasing distrust.

From the above, it follows that the most appropriate ESG communication is neither the most ambitious nor the most secretive, but the most balanced. Companies that receive the best evaluation of their ESG communication strategy are those that communicate what they do, acknowledge what they do not do, and subject both aspects to public scrutiny.

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