Sustainability perceptions must be aligned with actual performance

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.