What Your Company Can Learn From the Green Perception Gap

Last week, Interbrand released its inaugural list of the Best Global Green Brands of 2011 following Newsweek by a couple of years. The methodology splits out each company's actual environmental performance as determined by a Deloitte analysis of publicly available Thomson Reuters ASSET4 data and Interbrand's own analysis of public perception of each brand.

According to the study, companies like L'Oreal, Nokia, and HSBC are doing much more than they get public credit for, while for others like McDonald's, GE, and Coca Cola the reverse is true.

Whether one is an executive, investor, or consumer, what are the implications of the gap?

Interbrand draws some of its own conclusions here, including that companies whose performance score is higher than their perception score should communicate more about their efforts (except in cases where doing so would reveal trade secrets) and that companies where the reverse is true should increase their green performance. Sounds tough to disagree with when you consider individual companies.

But on considering the results by sector, different conclusions emerge. The ranking includes companies as diverse as Danone, Samsung, and Shell -- companies that generally don't directly compete for consumers' or investors' dollars.

Considering the list by sector reveals that within each, companies tend to cluster on their performance scores while perception gaps vary widely (on average, about three times more than the variation in performance scores). In other words, most companies' environmental performance scores are similar to their sector peers' scores while consumers' perceptions of the companies' green performance varies widely.

Assuming that the study's methodology is sound, these results do make some sense. Relatively consistent environmental performance scores within a sector may arise from sector dynamics: the nature of that vertical's manufacturing impacts, sharing or copying of best practices, etc. And widely varying perception levels may arise from the different value brands place on green (e.g., Toyota high, BMW low) and from brands' effectiveness at affecting consumers, among other factors.

Here are some questions to consider about the performance-perception gap depending on who you are.

Companies

Companies should first consider whether a gap between performance and perception is indeed bad. High perception scores can arise from a breakthrough product, for example, not just overzealous communications.

Next page: How investors and influencers should mind the gap