Sustainability perceptions must be aligned with actual performance

By our News Team | 2023

Innovative auto brand Tesla has more than US$4.1-billion at risk, exceeding than any other brand in a new study.

New research reveals that many of the world’s largest brands have value at imminent risk if sustainability perceptions of stakeholders are not aligned with sustainability performance.  This is according to a study published by brand valuation consultancy, Brand Finance.

First launched at the World Economic Forum in Davos earlier this year, ‘The Sustainability Perceptions Index’ showed that, for many of the world’s most valuable businesses, there can be billions of dollars of financial value to be gained from enhanced Environmental, Social, and Governance (ESG) action and associated communication.

Brand Perceptions

Photo by Makara Heng from Pexels

The researchers have now recalculated the valuations of each brand by considering their ESG performance by utilising data from CSRHub. The latter is a web-based tool that provides access to employee, environmental, community and governance ratings on most major companies in North America, Europe and Asia.

These newly derived values, in conjunction with the Sustainability Perceptions Scores (SPS), expose whether the public perceptions align with the actual performance of each brand.

Opportunity to generate value through genuine committment

“Our research found that where performance exceeds perception, there is an opportunity to rapidly generate value by communicating the brand’s genuine commitment to sustainability more effectively,” explains Robert Haigh, Strategy & Sustainability Director at Brand Finance.

“Conversely, where perception exceeds performance, value is at imminent risk as brands leave themselves open to public backlash and a ‘correction’ of their sustainability perceptions value.”

Tesla, perhaps surprisingly, is one such brand. Known as a pioneer of the electric vehicles and battery technology, Tesla’s image has clearly carried across into the perceptions held by global consumers. 

It has the highest proportion of value underpinned by sustainability perceptions of any brand (26.9%) resulting in a Sustainability Perceptions Value of US$17.8-billion. However, the strength of this perception creates its own risk, because whilst Tesla performs well on environmental components of sustainability, it is weaker on governance and measures of social sustainability. Tesla’s weaker CSRHub scores therefore create a value at risk of up to US$4.1-billion. This is more than any other brand in the table.

Conversely, Microsoft has the highest positive gap value of any brand, according to Brand Finance’s research – US$1.5-billion. This reveals that Microsoft’s sustainability performance exceeds its sustainability perception; meaning there is an opportunity for Microsoft to generate up to US$1.5-billion through enhanced communication of its sustainability initiatives and services.

Luxury fashion house Chanel is an example of a brand that has both a (relatively) high Sustainability Perceptions Score and a high CSRHub score. By engaging with a wide range of stakeholder groups, Chanel can better align its sustainability performance with its sustainability perception – based on strong, authentic sustainability communication.

You can download the full report here.

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    Dr Kin Kariisa

    Group CEO - Next Media

    Dr. Kin Kariisa is an extraordinary force at the helm of Next Media Services, a conglomerate encompassing NBS TV, Nile Post, Sanyuka TV, Next Radio, Salam TV, Next Communication, Next Productions, and an array of other influential enterprises. His dynamic role as Chief Executive Officer exemplifies his unwavering commitment to shaping media, business, and community landscapes.
    With an esteemed academic journey, Dr. Kariisa’s accolades include an Honorary PhD in exemplary community service from the United Graduate College inTexas, an MBA from United States International University in Nairobi, Kenya, a Master’s degree in Computer Engineering from Huazong University in China, and a Bachelor’s degree in Statistics from Makerere University.
    Dr. Kariisa pursued PhD research in Computer Security and Identity Management at Security of Systems Group, Radboud University in Nijmegen, Netherlands. As a dynamic educator, he has shared his expertise as a lecturer of e-Government and Information Security at both Makerere University and Radboud University.

    Dr Kin did his PhD research in Computer Security and Identity Management at Security of Systems Group, Radbond University in Nigmegen, Netherlands. He previously served as a lecturer of e-Government and Information Security at Makerere University in Kampala, Uganda and Radbond University in Netherlands.

    Dr Kin did his postgraduate courses in Strategic Business Management, Strategic Leadership Communication and Strategies for Leading Successful Change Initiatives at Harvard University, Boston USA.

    • Other current and previous roles played by Dr Kin Kariisa:
    • Lecturer of e-Government and Information Security to graduate students at Makerere University, Kampala and Radbond University in the Netherlands
    • Director of Eco Bank Uganda Limited, one of the largest banks in Africa
    • Chairman of the National Association of Broadcasters, an umbrella industry association for all Television, Radio and online broadcasters in Uganda.
    • Chairman of Board of Directors of Nile Hotel International, that owns the leading hotel in Uganda, Kampala Serena Hotel.
    • Chairman of Board of Directors of Soliton Telmec Uganda, the leading telecom company in Optic fibre business managing over 80% of optic fibre in Uganda.