Investors lose out if worried managers ‘greenhush’
Investment managers so worried about falling foul of “greenwashing” rules may be going too far the other way and “greenhushing” their investments.
Wednesday, February 18th 2026, 7:28AM 
3 Comments
Greenhushing has become a more significant problem around the world in recent years as regulators have clamped down on fund managers overstating their green credentials.
The Financial Markets Authority consulted last year on ethical investment disclosure guidance, saying that managers needed to keep their claims clear, have reasonable grounds for them and support them with evidence and facts.
As part of that consultation, it acknowledged that greenhushing could be a result of a lack of clarity about how to avoid greenwashing, or a response to a perception that regulatory or market expectations are too strict. “It is important for issuers to disclose the information that is material to investor decision making, which may include ethical characteristics, and it may be misleading to omit this.”
David Ireland, partner at Dentons, said the investment industry had evolved in the way it approached ethical and responsible investing claims.
“The initial reaction, I guess with people reacting to the FMA and to the ASIC action in particular on greenwashing has been ‘okay well you’re better to say nothing because actually as soon as you start talking about anything you’re doing that’s green, you’re going to be pinged’.”
ASIC has taken a hard line on misplaced green claims. It took a greenwashing case against Vanguard Investments Australia and made almost 50 regulatory interventions to address greenwashing misconduct in the 15 months to June 30, 2024.
Ireland said the problem was that not disclosing an investment stance could also be misleading.
“You might have a particular tilt that is not purely financial performance related – you should be disclosing that.
“Where you make that disclosure will be driven by how significant that is for your particular fund. Usually, that will just go in register information that you can refer people off to, so it wouldn't be in your main offer documentation, unless you were genuinely targeting stuff.
“But being coy about particular slants you're taking, particular focuses you're putting on your investment strategy can also be misleading, because you are not giving people the full picture as to the approach you are taking to investing.”
He said the question would be how material green focus was that was not being disclosed. That would dictate what the appropriate response might be.
“If it's just minor - no one's going to change their investment decision based upon a minor little ethical overlay you might put on some of your investments or a really minor exclusion - but if it's becoming operative in the way you're making investment decisions, then the transparency drive says, well, that's something that investors ought to be able to find out about.
“So somewhere in your publicly available documentation, people ought to be able to see that, so they can make a call as to, is this going to influence their investing decision? “
Ireland said there was a risk that regulators were creating a tangled web of what needed to be disposed and it could become confusing.
“And that was one of the concerns we've had with some of the disclosure guidance and commentary that comes out. So actually, you are almost forcing issuers of products to over-disclose or over-emphasize the extent to which they are being green, when actually it's not a big thing. It's not an ethical fund. They're not targeting any particular sustainability angle. And so it would then be wrong if you did state too much about it.
“But equally, if I'm saying I've got a general fund and I'm not going to invest in fossil fuels, but everything else is up for grabs…I just think from an investment approach, that that's not a good long-term punt. Then actually, no, I'm not going to shout that from the rafters because that's not a feature of the fund. But you probably need to have that somewhere in your information as to, ‘this is our investment approach’, so that those who are interested can actually see and they understand, okay, you haven't got an exposure to this particular type of asset class, and maybe that's going to influence me.
“So that's the drive, because green hushing was not a term that was used up until relatively recently. And now it is another buzz, yet another warning. You have to find the Goldilocks solution, right? You can't greenwash … But you still need to state what you are actually doing in the green space in some way, because that is equally relevant. Just reverse sides of the same coin in some ways. “
He said it was common in New Zealand. “I think, a really reasonable, pragmatic response from the initial alarms and concerns and what the FMA had been requiring of people”
He said it would be “disastrous” if regulators were mandating what had to be said because it could stifle innovation.
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Comments from our readers
A relevant question also from NZ taxpayers who are now unfortunately paying for the FMA to monitor all this stuff is why?
As another reader of Good Returns said last year regarding the climate related disclosure (CRD) requirements for the financial services industry
"I suspect we’ll look back on this climate reporting in years to come, with confusion & questions. Whilst there is no doubt that climate controls are increasingly important, I’m unsure whether the energy, effort & expense in producing these reports are the best use of resources &/or going to make a difference… although I’m sure that the ‘climate enthusiasts’ & those who are positioned to make a buck (or secure a taxpayer funded job) from all of this will have an opposing & vocal perspective"
The climate related disclosure (CRD) requirement for the financial services industry was yet another example of the last Government adding unnecessary cost and complexity to business. Banks and insurers etc. had to hire more staff specifically to meet their new climate disclosure requirements and these costs were inevitably passed on to their customers. To this day the New Zealand consumer continues to be saddled with additional costs due to an avalanche of overregulation much of which has questionable benefit.
The only people who seem to be winning from this additional regulation are Wellington bureaucrats.
Surely the FMA should be focused instead on the really important issues for this industry i.e. getting Opes Partners FAP licence cancelled when they clearly have a massive conflict of interest with the financial advice that they are currently providing to their clients on investment properties. MBIE are wrong AGAIN allowing Opes to hold a FAP licence in the first place and the FMA needs to intervene now as the chief regulator of the industry to safeguard consumers. If the FMA don't act on this then frankly they don’t have any credibility now when it comes to enforcement of the code of conduct for all FAP Licence holders which clearly spells out the following for the benefit of all consumers whenever they speak to an adviser nowadays.
Key Principles & Standards
Client First: Always put clients' interests ahead of your own or your firm's.
Integrity: Be honest, candid, and act with professional integrity, managing conflicts.
Suitability: Provide advice that is suitable for the client's circumstances, ensuring they understand benefits/risks.
The Opes model been marketed to clients as a “one-stop shop” would seem to be the very definition of a conflict of interest. In fact, I am struggling to think of a more obvious one.
I cannot believe that this industry in late February 2026 is still allowing the above to continue. Maybe in election year someone needs to speak to an MP now about this if Wellington’s bureaucrats don’t want to do the job that they are supposedly been paid to do by the taxpayer.
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"People who claim to measure ESG have no idea what they are measuring. It's the emptiest concept because of that reason.
ESG started as a measure of goodness. It came out of a UN document. Then it became a measure of alpha in the middle of the last decade. You were told you could make higher returns by investing in good companies. That was a lie.
Then it became a measure of risk in 2020/2021. But Russia invaded Ukraine. So they decided risk wasn't working. Now it's a measure of disclosure. That's quite a fall in the world. From goodness to alpha to risk to disclosure. Soon they will be telling me they picked ESG because those are their three favorite letters in the alphabet.
It is a concept sold without shame. It was born in sanctimony, nurtured with hypocrisy, and sold with sophistry."
On reflection, it makes the conversation about greenwashing as ridiculous as trying to measure ESG in the first place. But I guess most people know how I feel about that waste of oxygen. Let alone the plight of CO₂ levels.