An increasing number of companies are choosing to limit or withhold public disclosure of their carbon offsetting activities. This approach, commonly referred to as ‘green hushing’, is an attempt by organisations to reduce external scrutiny of their ESG strategies amid heightened regulatory, legal, and reputational risks.
While silence may appear to reduce immediate exposure, green hushing marks a retreat from transparency at precisely the moment when regulators, investors, and stakeholders are demanding greater clarity and accountability.
For organisations actively purchasing carbon credits as part of their sustainability strategy, silence can introduce material compliance, financial, and governance risks of its own.
The emergence of green hushing, and the associated risks
Over recent years, carbon offsetting via the Voluntary Carbon Market (VCM) (opens a new window) – the global, decentralised market for the buying and selling of carbon credits between private actors – has come under an increased volume of litigation, investigative journalism, and academic analysis. This scrutiny suggested that a significant proportion of issued credits may have overstated their climate impact – delivering limited or no additional atmospheric benefit.
These so-called ‘phantom credits’ undermined confidence across the VCM – triggering a loss of confidence from corporates, investors, and regulators that caused a sharp market dislocation. Pricing weakened, liquidity contracted, and various allegations of misrepresentation and governance failure emerged. Consequently, in 2023, the VCM experienced an estimated contraction of approximately 60% (opens a new window) in market value, depending on measurement methodology.
As a result, the ‘carbon neutral’ label, once perceived as a reputational asset, increasingly became a focal point for regulatory scrutiny, litigation risk, and activist challenge. In response, many corporate executives – driven by uncertainty over credit integrity, future litigation exposure, or regulatory interpretation – adopted a defensive posture, reducing disclosure around carbon credits.
Green hushing is no longer a marginal phenomenon. A 2024 survey conducted by consultancy South Pole (opens a new window) found that 58% of respondents were actively reducing their climate-related communications. Furthermore, 18% of surveyed companies had not published sustainability disclosures at all, despite continuing to pursue ESG initiatives – creating a widening gap between operational practice and external disclosure.
Green hushing introduces a distinct set of strategic risks that are increasingly difficult to manage, including:
Reputational risk – Prolonged non-disclosure can erode public trust, particularly where undisclosed carbon activity is later discovered. This may undermine brand credibility and complicate efforts to attract and retain talent in an environment where transparency is increasingly expected.
Financial and commercial risk – Reputational erosion can translate into lost revenue, consumer disengagement, or organised boycotts. In parallel, uncertainty around environmental strategy may affect commercial partnerships and access to sustainability-linked financing.
Legal, regulatory, and disclosure risk – Emerging regulatory frameworks, including the EU Corporate Sustainability Reporting Directive (CSRD) and California AB 1305, are rendering non-disclosure increasingly untenable. Organisations may be required to disclose the use of carbon credits, associated methodologies, and accountability mechanisms where projects underperform. Failure to do so may result in enforcement action, fines, or litigation.
Investor and capital markets risk – Investors are increasingly interpreting silence not as prudence, but as unmanaged risk. Limited disclosure can prompt divestment, increase the cost of capital, or expose organisations to shareholder challenge where ESG claims and risk governance are perceived as inadequate.
How insurance strengthens your carbon credit strategy
By functioning as an independent risk-governance mechanism, the insurance market has emerged as a critical tool for restoring confidence within the VCM.
Underwriters apply rigorous, data-driven due diligence, incorporating geospatial intelligence, project-level analytics, and risk-weighted modelling to assess performance risk before offering coverage. By pricing and transferring risks, such as non-delivery, reversal, and political intervention, insurance helps transform carbon credits from largely unprotected exposures into assets supported by defined financial protections.
To move from defensive silence towards credible, defensible disclosure, organisations should embed insurance into carbon procurement strategies through the following steps:
Insurability as a gatekeeper – Treat insurability as a first-order filter. Projects unable to secure insurance coverage should be considered higher risk, from both a compliance and reputational perspective.
Collaboration with specialist intermediaries – Work with experienced brokers and advisors to structure long-term offtake agreements that integrate insurance from inception, ensuring climate liabilities are identified and transferred, rather than retained implicitly.
Non-Delivery Insurance (NDI) – Coverage protecting buyers against the failure of a project to generate contracted credits due to developer insolvency, operational failure, or project underperformance.
Political Risk Insurance (PRI) – For international or Article 6 projects, PRI can mitigate losses arising from government actions, including revocation of approvals, changes in law, or restrictions on credit export.
As regulatory scrutiny intensifies and investor expectations harden, disclosure supported by demonstrable risk governance is becoming the baseline rather than the exception.
By integrating insurance into carbon procurement strategies, organisations can move beyond green hushing towards green integrity. In collaboration with third-party verification, this ensures sustainability claims are underpinned by financial accountability, and resilient risk transfer.
In doing so, transparency becomes not a liability, but a source of strategic strength.
For further discussion on how your organisation can move toward green integrity, reach out to a member of the Lockton Carbon Credit Team here (opens a new window).
