21/07/2025

MONDAY | JULY 21, 2025

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From greenwashing to greenhushing S USTAINABILITY is no longer a volun tary aspiration. It has become a busi ness necessity. As climate risks, social inequalities and governance failures 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. 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, 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, 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. COMMENT By Dalilawati Zainal To address these challenges, the government introduced the NSRF, led by the Finance Ministry and the Securities Commission

dominate global markets, companies face increasing pressure to show both perform ance and purpose. In this context, environ mental, social and governance (ESG) report ing 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. 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 THOUGH THE dust hasn’t fully settled, it appears Trump is going to proceed with his plans to put tariffs on almost all imports into the United States. This is definitely going to impact the global economy. We need to be prepared for the economic challenges that ensue. America’s import totalled US$3.4 trillion (RM14.44 trillion) in 2024. Given the US GDP of US$29.2 trillion, imports were 11.6% of US GDP by value. Trump has said that he wants US producers to produce more of the goods that are currently being imported. But that, obviously, cannot occur overnight. So, these goods will still have to be imported, but perhaps from a country with a slightly lower tariff. The impact of these tariffs on the US population would be a higher retail price for imported goods, as the importing firms and retail outlets will try to pass as much of the increase in prices to the consumers. In the case of non-essential goods, which have a more elastic price-demand curve, importers and retail businesses might absorb some of the increase in prices. The tariffs collected by US Customs will go to government coffers. The income of US households will not be augmented in any way because of these tariff collections. On the contrary, the real purchasing power of US households will decrease by about 10% to 20% because the prices of goods have increased. LETTERS letters@thesundaily.com

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 towards structured

“In the race to appear green, are Malaysian companies saying too much or not enough?

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 towards more data driven ESG communication and improve overall reporting credibility. However, amid these

Blockchain, ESG data platforms and artificial intelligence-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. DrDalilawati Zainal is a senior lecturer at the Department of Accounting, Faculty of Business and Economics, Universiti Malaya. Comments: letters@thesundaily.com been prescribed lower tariffs. The countries with the higher US tariffs would therefore face stronger recessionary pressures. Global exports of goods were US$25 trillion in 2024. US imports of goods are equivalent to about 13.6% of total export value of goods in the world. This is significant, and taking into account the existing over-capacity in multiple sectors – housing, construction, iron and steel, several commodities etc – this additional downward pressure is likely to push the global economy into a downward spiral, which as usual, will affect the bottom 20% of the population in all countries most adversely, as they are the least likely to have savings or be enrolled in social protection schemes. If a recession unfolds, it probably will occur about a year from now, as it takes time for the negative multiplier effects to kick in. That gives us sufficient time to plan carefully how we in Malaysia can manage this downturn. As Parti Sosialis Malaysia stressed during the Covid-induced lockdowns in 2020-2021, one of the primary policy goals should be to ensure that no Malaysian is deprived of basic needs – food, housing, health care and education. We have more than enough resources to ensure that. But we need to work on a good contingency plan. PSM calls on the Madani government to take the possibility of a global recession seriously and start working on a contingency plan to deal with it. Jeyakumar Devaraj Chairperson Parti Sosialis Malaysia

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, 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

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

Likely impact of Trump’s tariffs on ordinary citizens

Trump’s tariffs will put recessionary pressures on both the US and countries exporting goods to the US. – REUTERSPIC

recessionary pressures as the US market for their goods shrinks as a result of the decline in real buying power of the Americans. The countries punished with higher tariffs might see their exports being substituted by relatively cheaper goods produced by countries that have

This decrease in real buying power will depress the demand for goods and services and tend to push the US economy into a recession. The increase in cost of living is likely to increase the level of unhappiness in the public. Countries exporting to the US will also face