Sustainability perceptions carry a financial value | WARC | The Feed
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Sustainability perceptions carry a financial value
Major brands have hundreds of millions of dollars’ worth of value contingent on how sustainable they are perceived to be, according to a new study* by Brand Finance and the International Advertising Association (IAA) – and that’s the case whether they are seen as sustainability champions or not.
Why it matters
Perceptions of sustainability matter more for some brands and sectors than others. Tesla, for example, is particularly financially reliant on sustainability perceptions: 26.9% of its brand value is associated with a reputation for sustainability. Similarly, sustainability perceptions play an important role in the luxury auto sector with an average sustainability driver score of 22.9% – well ahead of the next sector, soft drinks on 13.7%.
And amid concerns about greenwashing, Brand Finance and IAA find that 62% of consumers believe claims about sustainability made by brands. That said, 79% also indicated they had reduced their use of a brand if they’d discovered it was acting in an unsustainable way.
Who’s got most at stake
This analysis reveals tech companies and luxury carmakers to have the highest sustainability perceptions values, with sustainability being judged across the three ESG pillars:
- Amazon $19.9bn (sustainability perception score 4.40)
- Tesla $17.8bn (5.43)
- Apple $14.7 bn (4.50)
- Google $14.6bn (4.74)
- Microsoft $9.0bn (4.28)
- WeChat $8.4bn (6.27)
- Porsche $8.1bn (4.44)
- TikTok $80.bn (4.55)
- State Grid Corporation China $7.4bn (5.64)
- Mercedes-Benz $6.5bn (4.74)
But those values largely reflect the size of the companies; strip out revenues and the picture starts to change: Tesla is still there, but so too are the brands one might expect to see – IKEA and Patagonia for example – while certain brands score highly in their home market (eg.The Body Shop in the UK (sustainability perception score 6.83), Natura in Brazil (6.25), Yves Rocher in France (5.87)).
“Failing to communicate clearly about ESG topics puts value at risk. Consumers are relatively trusting of sustainability claims, and clearly value brand’s commitment to sustainability, so under-communicating or ‘green-hushing’ is a missed opportunity. On the other hand, communication must be authentic and supported by action, because over-claiming or ‘greenwashing’ exposes the business to hundreds of millions of dollars of reputational damage” – Robert Haigh, Strategy & Sustainability Director, Brand Finance.
*The Sustainability Perceptions Index takes the values established in Brand Finance's annual Global Brand Equity Monitor and derives a Sustainability Perceptions Value based on the sustainability part of a brand drivers’ analysis and on how sustainable consumers perceive a brand to be versus the sector median.
Soured from Brand Finance and IAA
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