Investors see top 100 global brands as performing more poorly on ESG issues in 2012 while reality shows significant improvement, according to Sustainability Leadership Report
The world’s largest brands are making greater progress on ESG issues but are receiving less credit for it from investors, purchasing managers and graduating students, according to the 2012 Sustainability Leadership Report.
Of the 94 brands measured in 2011 and 2012 for both ESG issues and public perception of their corporate responsibility, 93 show a sharp improvement in ESG-related performance, according to the study, organized by Brandlogic and CRD Analytics. At the same time, 68 of those 94 companies are experiencing a deterioration in their perceived performance.
‘Sustainability carries tremendous weight when it comes to corporate reputation,’ James Cerruti, Brandlogic’s senior partner of strategy and research, and author of the report, says in a press release.
‘Even as real performance rose for almost all of the brands we analyzed, average perceived performance dropped off when compared with 2011.’
The actual performance scores of the world’s top brands, including Facebook, Starbucks, Toyota and more, were compiled based on 141 metrics tied to ESG issues.
The perception of the performance of the brands was gauged in a global study of 2,500 investors, supply chain managers and students in the UK, the US, Germany, Japan, India and China.
Of the 94 brands given a Sustainability Reality Score in both 2011 and 2012, the mean rating climbed 9.3 points. In other words, the mean rating on a 100-point scale measuring actual performance related to ESG issues rose from 42.4 last year to 51.7 this year, according to the study.
A fifth of the companies (20 percent) increased their score by 10 points or more on the scale while seven of them boosted their scores by more than 24 points.
At the same time, the mean score on the Sustainability Perception Score fell by 2.7 points, from 47.2 points last year to 45.7 points this year, according to the study’s authors. The scores of almost a third of the companies measured fell by more than five points while 12 of them suffered a drop of more than eight points.
In 32 of the 33 cases in which perception lagged behind a company’s actual performance in 2011, the perception gap widened in 2012, the researchers find.
In every case in which the perceptions of a company’s performance were better than reality in 2011, that gap has narrowed this year, meaning companies are less likely to benefit from overly favorable perceptions. Last year, 15 companies benefited from a gap of 20 points or more; in 2012, only Amazon and Facebook do.
‘This data seems to indicate that most of the 100 companies’ real ESG performance has exceeded their ability or efforts to communicate this improved performance effectively,’ the report concludes.
‘It may also reflect increased scrutiny and skepticism by these groups. More companies are getting less credit for their sustainability efforts and it would appear that respondents have become tougher critics on an issue seen as more important than ever.’
