Assessing Companies’ Walk-Talk Ratio

I’ve long maintained that for many companies, the environmental walk-talk ratio is out of balance, though not necessarily in the way most people think. Conventional wisdom has it that green and sustainability initiatives for companies is all too often is a fig leaf — a cover-up to obscure environmental shortcomings and misdeeds.

Perhaps. But most companies are smarter than that.

The other side of the coin are companies that are walking more than they are talking — that is, doing more than they’re saying. There are several reasons why this happens: first, most of what companies are doing amounts to “doing less bad,” not an easy story to tell; second, the most significant actions companies are taking typically don't relate directly to their products’ value proposition, making them hard to market or promote in a sound bite; and third, when companies talk about what they’re doing right, they often risk setting themselves up for criticism about the problems they haven’t yet solved.

So, what is the walk-talk ratio? A recent study took a look at how some global fared, and while it offers some interesting findings, it raises as many questions as it answers. The study, by brand consultancy Brandlogic and investment research firm CRD, surveyed three groups about the sustainability perception of "100 leading companies," then compared those perception scores to these companies' actual sustainability performance. (You can download the report here - PDF.)

First, Brandlogic measured the perception of 100 brands among individuals in the US, China, Japan, Germany, UK and India, focusing on investment professionals, purchasing professionals and graduating university students soon entering the workforce, "all of whom have reasons to be highly attentive to the performance of corporations on ESG [environment, social, and governance] factors." The researchers assigned 50 percent of the ESG factors to perception of social issues, 25 percent each to environmental and governance issues. The result was an overall perception score. That was then compared with an analysis of the company's ESG performance, based on 175 metrics compiled by CRD. That resulted in a ratio of a perception score to a performance score.

The result: Two-thirds of the 100 companies enjoyed a more favorable sustainability reputation than they deserved, based on their actual performance. On the one hand, that suggests that some companies are overcommunicating about ESG issues. On the other hand, it suggests that some companies may not be communicating enough, or effectively, about what they are actually doing.

Which is it? No doubt a little of each.