BrandLogic released its second annual Sustainability Leadership Report today, a study of the perceived and actual sustainability performance of 100 of the world’s best-known brands. Unlike most perception studies, which typically focus on the general public, BrandLogic surveyed 2,500 professional investors, purchasing and supply-chain professionals, and recent university graduates. According to BrandLogic CEO James Cerruti, these are the stakeholders driving most companies to adopt sustainability practices and the ones whose opinions could have the greatest impact on a company’s success.
BrandLogic’s Sustainability Perception Scores were compared with a Sustainability Reality Score provided by CRD Analytics, creator of the NASDAQ Global Sustainability Index. CRD rated companies based on 141 metrics of environmental, social, and governance issues. The result was a gap analysis, showing how perceptions of companies squared with reality.
Companies that fared well — that is, those that are both perceived to be leaders and have the performance metrics to back it up — include ABB, BMW, Cisco, Dell, Deutsch Bank, General Motors, IBM, Intel, Johnson & Johnson, SAP and Volkswagen.
Companies whose perceived performance the study found to be significantly better than their actual performance — including Amazon, Apple, Avon, Google, Honda, Toyota and Zurich — should take note. “These companies have some value at risk because they’re getting benefits from this misperception in the form of attracting talent they might not otherwise get, and accessing lower-cost capital as well as lower risk premiums on insurance products,” Cerruti told GreenBiz.com in a recent interview.
While socially responsible investors have paid attention to sustainability for years, Cerruti said the rest of the investment community is now starting to integrate sustainability into how they evaluate companies, which makes it all the more important for companies to pay attention. “The trend is in this direction,” Cerruti said. “It’s not a waterfall where everyone is on board, but more and more people are paying attention. In our study, 88 percent of investors said sustainability is either very important or somewhat important, and the number that said ‘very’ has gone up year over year.”
Perception vs. Reality
That means companies with a perception gap could feasibly be looking at trouble should investors take a closer look at their real performance. It’s more common, however, that companies are performing better than they are perceived, which comes with its own set of risks.
According to the BrandLogic report, of the 94 companies included in both the 2011 and 2012 reports, 93 had improved their real performance significantly year over year, but in two-thirds of those cases, the companies’ perception scores had dropped from one year to the next. On average there was an increase of nine points on real performance and a decrease of three points on perceived performance.
“That tells you that while companies are doing a lot to improve performance, they are having a hard time communicating, engaging stakeholders, and getting their story across,” Cerruti said. (It should be noted that BrandLogic is in the business of helping companies communicate.)
Next page: Is transparency falling on deaf ears?