There’s Real Value in Sustainability: Tell the World!

Until recent years, “green” initiatives often were a peripheral activity for many businesses, pursued as part of an overall corporate responsibility campaign or in response to demands from part of its customer base.  Some did a particularly good job of publicizing their efforts—perhaps at times beyond the scope of their actual level of green activity—and there was concern that perception might matter more than actual performance.   However, the release last week of the 2012 “Best Global Green Brands” ranking, a joint project carried out by Deloitte LLP and Interbrand Corporation, suggests that there is a clear correlation between how a company performs in sustainability, how it reports on disclosure of that performance, and how its brand is perceived.

This  linkage between actual performance and market perception is an interesting finding—possibly even a breakthrough concept—in the 2012 list, because we have determined that when performance and perception are relatively aligned, the result can lead to improved shareholder value.

Interbrand and Deloitte began collaborating on a study of sustainability performance vis-a-vis perception nearly two years ago and produced the first “Best Global Green Brands” study in 2011.  Interbrand brought its significant track record in brand perception to the study and Deloitte brought its capabilities in assessing business performance.  These research findings offer a roadmap for companies that want to determine how well they are “living” their environmental commitment, which translates into a heightened public perception of their performance in an increasingly important area for consumers and the general public.

With the 2012 study, we now have two-year comparative data.  In this case, the data gives us a strong indication that companies move up and down in the ranking based on three main factors:

 

1. Where they were on the list in 2011 vs. 2012
2. How much their score changed from last year to this year (good or bad)
3. The degree to which their disclosures were available for public evaluation

Moreover, we see a continued trend in three areas of disclosure—the quality of the data, frequency of reporting, and depth of information disclosed.  More, and frequent disclosure is proving to be a very good thing, and, inversely, failure to disclose sustainability information well and timely can negatively affect brand perception.

The 2012 study provides insights for companies to consider in shaping sustainability and reporting programs, particularly as they relate to enhancing brand value.  As the new study shows, there is real value in being sustainable—from driving product innovation to differentiating competitors to engaging consumers in new ways.  And “walking the talk” is an essential ingredient in filling the gap between customer perception and a brand’s actual green performance.

Chris Park
Principal
Deloitte Consulting LLP


As used in this document, "Deloitte" means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication.

Copyright © 2012 Deloitte Development LLC. All rights reserved.

Member of Deloitte Touche Tohmatsu Limited

Deloitte and Interbrand release second annual study on Best Global Green Brands

Today, Deloitte and Interbrand  are pleased to announce release of their second, collaborative report on “Best Gobal Green Brands.”

This is an exciting time for Deloitte to do work in this area of growing impact among the world’s leading businesses.  What makes this particular project especially relevant for businesses involved in sustainability efforts is that our study focuses on both green brand performance and green brand perception.  Obviously, the two are not necessarily the same.  Marketplace expectations about what makes a brand “green” are rapidly changing as companies engage in sourcing, production, distribution, and marketing activities that express various forms of commitment to protecting the environment.  As those expectations evolve, many companies are looking for guidance about what’s most important—and brand relevant—to their specific activities and investments.   The inaugural “Best Global Green Brands” was released in July 2011.

In order to assist them, Deloitte combines its significant experience and capability in assessing business performance with Interbrand’s track record in brand perception.  Companies that make the list of leading global green brands have done substantial work aligning market perception with actual performance.  The methodology Deloitte developed to assess these measures is based on evidence provided in public disclosures and reporting, and the same process and tools can then be used to help companies who experience a gap between how the company is perceived on issues of sustainability and citizenship versus how they actually perform in those two areas. 

We believe that when performance and perception are relatively aligned, the result can translate into improved shareholder value.   Brand and reputation issues are among the top risk management concerns of leading companies, largely due to new social media channels  that enable immediate information sharing.  As a result, an event anywhere in the world can have a big effect on a company’s brand perception and value, even if the event is significantly upstream in the value chain.  If that impression is negative, it can be disproportionally harmful to shareholder value.  The goal for many companies is to get out in front of this reality by identifying areas of potential discrepancy or risk, and  is the first step in putting a plan in place to address risk and protect value. 

Deloitte’s methodology provides a way for companies to determinine how well they are “walking the walk” and “talking the talk” around their environmental commitment—and Interbrand’s ranking based on that methodology relates their performance to public perception.  For companies interested in aligning performance and perception, this is a big opportunity to create top- and bottom-line value and increase their connection to stakeholders who are concerned with sustainability performance.


Chris Park
Principal
Deloitte Consulting LLP

 

As used in this document, "Deloitte" means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting

This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication.

Copyright © 2012 Deloitte Development LLC. All rights reserved.

Member of Deloitte Touche Tohmatsu Limited