New research from the International Advertising Association (IAA), conducted by leading valuation firm Brand Finance indicates that the world’s biggest brands are missing out on billions of dollars of potential value by failing to properly communicate their sustainability achievements and progress.
The Sustainability Perceptions Index is based on a study of over 150,000 respondents across 40 countries. Key outputs include:
- the role of sustainability in driving choice in each industry
- the brands that global consumers believe are most committed to sustainability
- the financial value of a reputation for sustainability
- the value at risk, or value to be gained, arising from a gap between sustainability perceptions and performance
Apple has the highest sustainability perceptions value of any brand, US$33.3 billion. This huge sum is driven by a combination of Apple’s financial scale and supportive consumer perception. Whilst few would claim that Apple is faultless when it comes to sustainability, it is clear that most consumers believe that it is sufficiently committed to minimising its negative impacts to continue buying, and paying a premium for, its products.
Microsoft has the second highest total value (US$22.7bn), along with the highest ‘gap value’ of any brand in the index - US$3.2 billion. Microsoft has engaged extensively in sustainable initiatives, including committing to becoming carbon neutral, water positive, and zero waste by 2030. Yet its communication of its commitment and progress has been somewhat muted. The implication of this is that with concerted effort to more effectively communicate its sustainability achievements, Microsoft could add over $3 billion of value for shareholders.
Microsoft is not alone in leaving value on the table in this way – 85 brands have a positive gap value of over $100 million, totalling US$25 billion.
At the other end of the spectrum is Tesla. Tesla is well known as a pioneer of the electric vehicles and battery technology that are aiding the transition to a lower carbon economy. This image has carried across into the perceptions held by global consumers. Tesla is seen in several countries including Mexico and the UK, as the brand with the greatest commitment to environmental sustainability. However, the strength of this perception creates its own risk, because whilst Tesla performs fairly well on perceived sustainability, when it comes to sustainability performance, it falls significantly short of peer average. As a result, Tesla has $1.54 billion of value at risk.
Robert Haigh, Brand Finance’s Strategy & Sustainability Director
“Brands have to strike a fine balance when communicating about sustainability. Consumers are now rightly attuned to potential greenwashing, however in response, many brands have taken too precautionary an approach, restricting sustainability communication to a minimum. This greenhushing reduces the incentive for competitors to improve their performance, slowing progress industry-wide. Just as importantly, these brands are letting financial go to waste, short-changing shareholders and other stakeholders in the process.”
Dagmara Szulce Managing Director, IAA Global
“We see this as an incredibly potent tool to incentivize action that aligns with the UN SDGs and wider aims of the UN Global Compact. By highlighting the financial value that is contingent on sustainability perceptions, we hope to harness businesses’ profit motive, moving them past the point where they see sustainability as a ‘hygiene factor’, to a point of rapid, concerted action.”
Sasan Saeidi World President & Chairman, International Advertising Association
“Green-washing” vs “Greenhushing”. One can only imagine the utter chaos that is ensuing in boardrooms over decisions pertaining to this topic. To do or not to do? From balancing profits, to protecting long-term brand value, investing in the long term, and the pressures of prioritizing Wall Street Vs high street.
In order for sustainability to become a true driver of your brand equity; in a believable, relatable, and convincing manner; it needs to be simple. It’s an act that needs to break down the walls of complexity formed around this topic. It needs to use simple human language to explain complex mechanics.”
Hervé de Clerck VP IAA Global, Sustainability Council Chair Founder, Adforum.com Dream Leader ACT - Responsible.org
"Over the last twenty years, our industry has played a pivotal role in advancing the sustainability agenda, responding to consumer pressure by integrating green practices into corporate operations. Many brands have actively promoted these initiatives through their communication efforts. However, to avoid negative repercussions, authenticity, transparency, and commitment must be prioritized in the marketing mix. Green washing/hushing kills Trust.”
See the full report here.