Companies need to pay closer attention to customer perceptions of sustainability and see it as a huge financial benefit which adds real value to an organisation, according to a new report from Brand Finance in association with the International Advertising Association.
\nIn a first-of-its-kind study, Brand Finance and the IAA reveal the financial value of sustainability as perceived by the customers of the world\u2019s biggest brands. As part of the analysis, Brand Finance evaluated how sustainable each brand is perceived to be, allocating a \u2018Sustainability Perceptions Score\u2019 – after stripping out the impact of revenues – to see which brand consumers’ thoughts are the most committed to sustainability.
\nThe Brand Finance Sustainability Perceptions Index, released at the World Economic Forum in Davos, reveals that major global brands such as Amazon, Tesla, Apple, and Alphabet each have billions of dollars contingent on carefully managing a reputation for a commitment to sustainability.<\/p>\n
\u201c 79% of consumers say they have reduced their use of brands if perceived to be acting unsustainably\u201d<\/p>\n
The report shows that Amazon has the most at stake, with a sustainability perception value of US$19.9 billion. Other notable brands at the top of the ranking include Tesla (US$17.8 bn), Apple (US$14.65 bn), and Google (US$14.6 bn).
\nThe report also reveals that consumers fairly trust the brands\u2019 sustainability-related communication, with 62% believing claims about sustainability made by brands. However, 79% of consumers also said that they had reduced their use of a brand, having discovered it was acting in an unsustainable way, reinforcing the imperative for brands to communicate clearly, authentically, and accurately.
\nTesla, IKEA, and Patagonia performed well across a wide range of markets. Lush and The Body Shop scored very highly in the UK. In France, Yves Rocher and tyre brand Michelin stood out, while Brazilian cosmetics giant Natura scored highly in its home market.
\nCommenting on the report, Sasan Saedi, the IAA\u2019s World President and Chairman, said: \u201cWe are extremely proud to be associated with Brand Finance on the release of its first Brand Finance Sustainability Perceptions Index report in Davos. We want to ensure sustainability becomes an even bigger focal point for us at the IAA in 2023.\u201d<\/p>\n
\nSasan added: \u201cMeasuring the sustainability perception of some of the world\u2019s biggest brands is quite unique as it opens up areas of self-reflection as a means to assess progress or the dialling up of efforts. We need more brands to commit authentically to the sustainability cause and this report from Brand Finance really helps us put the topic of sustainability into perspective.\u201d
\nDagmara Szulce, Managing Director of IAA Global, said: \u201cAs consumers become more aware of environmental and social issues, they are increasingly taking into account a company’s sustainability practices when making purchasing decisions. If a company is perceived as not being environmentally or socially responsible, it may lead to negative perceptions of the brand and ultimately result in a decrease in sales and customer loyalty. CMOs should therefore consider incorporating sustainability into their marketing strategies to appeal to conscious consumers and mitigate brand value erosion.\u201d
\nRobert Haigh, Brand Finance Strategy and Sustainability Director, said: \u201cFor the first time, companies can now see the financial value that is tied to a reputation for acting sustainably. Whether they are seen as sustainability champions or not, the world\u2019s biggest brands have hundreds of millions of dollars\u2019 worth of value contingent on how sustainable they are perceived to be\u201d
\nHaigh concluded: \u201cFailing to communicate clearly about ESG topics puts value at risk. Consumers are relatively trusting of sustainability claims, and clearly value brand\u2019s commitment to sustainability, so under-communicating or \u2018green-hushing\u2019 is a missed opportunity. On the other hand, communication must be authentic and supported by action, because over-claiming or \u2018greenwashing\u2019 exposes the business to hundreds of millions of dollars of reputational damage.\u201d
\nRead the full report here – https:\/\/brandirectory.com\/reports\/sustainability-index-2023<\/p>\n
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The International Advertising Association<\/strong> \n Brand Finance<\/strong>
\nEstablished in 1938, the International Advertising Association is the only global association that represents all areas of the marketing and communications industry. For over eighty years the IAA has championed key industry issues such as freedom of commercial speech, self-regulation, responsible advertising, education and professional development.<\/p>\n
\nBrand Finance is a world leading research, valuation and strategy consultancy.
\nHeadquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes over 100 reports which rank brands across all sectors and countries.
\nBrand Finance is a regulated accountancy firm, leading the standardization of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671 and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.<\/p>\n\n