Green Silence: How Does Silence Become a Crime Against Sustainability?
When discussing environmental sustainability specifically, the focus is on disclosing the impacts of an organization’s operational activities—namely, whether the organization harms the environment during product manufacturing, and whether its products contribute to environmental damage after consumption. Consequently, sustainability governance mandates honest and accurate environmental disclosure; in other words, governance expects companies to engage in green disclosure. Conversely, if a company’s management is not committed to environmental protection or is unable to cover related costs, it may conceal these facts from the public and from the Capital Markets Authority (CMA). In such cases, withholding disclosure constitutes “green silence,” as it is related to environmental issues.
An organization or company engages in green silence for one of two reasons:
1. Preventive silence (“fear of greenwashing”): The company may fear being held accountable due to environmental data that is open to multiple interpretations. That is, it discloses ambiguous data with the intent to mislead; therefore, the company eliminates disclosure of such data altogether. For example, a famous global fashion brand, after facing lawsuits and sharp criticism regarding exaggerations in its “Conscious” sustainable production line, chose preventive silence in its advertising to avoid new accusations of greenwashing.
2. Selective silence regarding environmental data to mislead consumers (“passive greenwashing”): In this case, the company omits certain data while including other data in its disclosure, thereby deceiving consumers into believing the company’s disclosure is comprehensive. For instance, a coffee company selectively remained silent about the logistical difficulties that make recycling its capsules nearly impossible at local facilities.
How can green silence be addressed? It is essential to distinguish between the two types:
- Regarding preventive green silence, the Authority may deem the company’s disclosure a violation of Rule 10 of the Capital Markets Authority’s regulations if it finds the company’s explanation for its silence unconvincing. Given the absence of intent to mislead, the matter would typically end with a fine imposed by the Authority’s Disciplinary Board.
- Regarding selective green silence, the company would face harsher penalties from the Disciplinary Board, and its case would be referred to the Capital Markets Prosecution to determine whether its actions constitute offenses under disclosure laws, media and consumer protection laws, and commercial fraud statutes.
What is required to break green silence? Simply put, having scattered regulations across the Authority’s rules, consumer protection laws, media laws, and commercial fraud laws is insufficient. A standalone law specifically targeting greenwashing must be enacted. This law should include:
1. General compliance standards applicable to all organizations in the country, not only joint-stock companies subject to the supervision and regulation of the Capital Markets Authority, in order to address both preventive and selective green silence.
2. This would require the Authority to issue specific compliance standards for sustainability governance for the joint-stock companies under its jurisdiction, with greater precision and specialization in environmental disclosure. Meanwhile, the Ministry of Commerce would oversee the remaining organizations.
3. Explicit environmental offenses that include a precise and flexible criminal description of cases of selective green silence aimed at implicitly misleading the public by remaining silent on material environmental data while focusing attention on peripheral data, thereby portraying the company as environmentally responsible.
4. No requirement for specific criminal intent, to facilitate the imposition of penalties by judges of the Capital Markets Court (the Commercial Court).
Faten Al-Naqib, Attorney
