Greenwashing, greenhushing, and the path to green banking

This study investigates how governance characteristics, specifically gender diversity, and bank business models influence the transition from greenwashing and greenhushing to becoming green banks. A balanced panel of 150 listed banks worldwide from 2015 to 2021 is used. Latent Markov models are applied as a methodology capable of explaining the evolution of a group of banks and the characteristics that may affect their transition over time. Key findings reveal a positive correlation between having a female CEO with at least 30 % female board representation and the likelihood of a bank shifting from greenwashing to a green stance. Conversely, a higher proportion of women on the board appears to reduce the likelihood of transitioning from greenhushing to a vocal green position, suggesting a more risk-averse and conservative approach. Additionally, investment-oriented banks are more likely to evolve toward vocal green banking than retail and universal banks. The research advances the literature on greenwashing and greenhushing by highlighting the importance of governance characteristics in supporting environmentally responsible practices. • A female CEO and at least 30 % female on board increases the likelihood of shifting from greenwashing to a green stance. • Women on board reduce the likelihood of transitioning from greenhushing to a vocal green position. • Investment-oriented banks are more likely to evolve toward vocal green banking than retail and universal banks. • Female CEOs improve environmental performance when banks are in a “brown” status.