The Conference Board Governance Center Blog

Jan
26
2014

How Sustainability Can Enhance Corporate Reputation

By Thomas Singer, Researcher, Corporate Leadership, The Conference Board

Despite a general acknowledgement that environmental, social, and governance (ESG) initiatives can affect a company’s brand value and reputation, the specifics of this relationship are not always well understood, leaving a number of questions and challenges to business leaders in charge of overseeing and reporting on sustainability. A new publication from The Conference Board explores the increasingly important link between sustainability, brand, and reputation to better understand how and when companies can leverage sustainability initiatives to drive brand value.

The report, Sustainability Matters 2014: How Sustainability Can Enhance Corporate Reputation, presents leading research on the link between sustainability, brand, and reputation. The annual report is a curated collection of select Director Notes – executive-length publications in which The Conference Board engages experts in an open dialogue about topical issues of concern to member companies – released over the past year. This year’s report features 10 authors representing seven academic institutions and three consultancies/research organizations: Harvard Business School, EMLYON Business School, Kellogg School of Management, University of New South Wales, City University of New York, Copenhagen University, Stellenbosch University Business School, Brandlogic, CSRHub, and Framework LLC.

Each section of the report offers insights to help guide company directors on how to create long-term brand value with sustainability initiatives that are chosen not for their mere reputational implications but for their strategic relevance. Some of the business challenges addressed in the report include:

  • How can companies integrate sustainability achievements and economic results?
  • What organizational changes are needed to achieve “shared value”?
  • What elements of sustainability are more likely to drive brand value?
  • What is the relationship between real and perceived sustainability performance?
  • How can companies effectively manage and measure reputation?

Below are some highlights from the report:

  • Sustainability initiatives strengthen brand equity and corporate reputation. Surveys of senior managers and investment professionals in global firms have found that brand equity and corporate reputation are perceived as the most important areas where sustainability actions bring benefit and add value.
  • Neglecting sustainability disclosure can be costly. According to Samsung, a one percent decrease in brand value of the company due to unfavorable evaluations from investment organizations and/or NGOs, caused by insufficient climate change response is equivalent to losing about US$ 200 million.
  • Consumers care about reputation. More internet-connected consumers in emerging markets and elsewhere are progressively making the link between a company’s reputation and its product brands. In a survey of 1,375 consumers and 575 senior executives of companies with revenues of over $500 million in China, Brazil, the United States, and the United Kingdom, 78 percent of respondents indicated they do not buy a product if they do not like the parent company.
  • Sustainability is vitally important for the “highly attentive” audience of investment professionals, purchasing managers, and graduating university students. 88 percent of respondents characterized as “highly attentive” state that corporations’ good corporate citizenship is either extremely or somewhat important in the decisions they make to invest in, partner with, or work for a company.
  • There is a significant gap between sustainability perception and sustainability reality. Companies’ ability to deliver on sustainability is outstripping their ability to communicate their sustainability achievements effectively. Brandlogic research shows some companies have a relatively high sustainability perception score, despite below-mean real performance and a relatively modest commitment to sustainability factors. Meanwhile, other companies have a relatively high sustainability reality score, but a relatively low perception score despite major efforts to communicate sustainability commitments.
  • Happy employees + good environmental policies = strong brands. There is a relatively strong correlation between a measure of brand strength and a measure of sustainability. The most important drivers of the correlation appear to be 1) how well a company treats its employees and 2) a company’s environmental policies.

Members of The Conference Board can download the report online. If others are interested, please contact Thomas Singer, editor of the report and researcher at The Conference Board.

About the Blogger:

Thomas Singer, Researcher, Corporate Leadership The Conference Board

Thomas Singer, Researcher, Corporate Leadership The Conference Board

Thomas Singer is a researcher in corporate leadership at The Conference Board. His research focuses on corporate social responsibility and sustainability issues. In addition to his work at The Conference Board, Singer serves as an independent consultant advising on corporate sustainability strategy.

Prior to joining The Conference Board, Singer worked with Blu Skye Sustainability Consulting and SustainAbility, helping clients embed sustainability into their core business. Over his career, he has supported engagements with industry leaders across sectors, focusing on strategy development, opportunity assessment, competitive analysis, and stakeholder engagement.

He began his career as a management consultant with Kaiser Associates, advising clients on white space opportunities, competitive analysis, and benchmarking. Singer is a graduate of Tufts University.



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