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The Sustainability Leadership Report: Measuring Perception vs. Reality
October 14, 2011
In recent years, the way companies are thinking about corporate sustainability has shifted. For the most part, it had been a secondary practice centered on reporting. Now, it’s starting to influence strategic business decisions that go straight to the heart of corporate operations and brand reputation. Co-authored with Michael Muyot
Companies increasingly recognize that a proactive stance on sustainability is becoming a competitive necessity in attracting investors, employment talent and supply chain partners, as well as customers. Because of this, those responsible for creating and maintaining brand relevance need to pay close attention to their company’s sustainability practices.
A key question corporate communicators must come to grips with involves the linkage between operational sustainability practices and corporate brand communication. If sustainability practices and commitments are indeed becoming more important to decision-making among corporations’ major constituencies, what profile should they be given in the organization’s brand positioning and communications?
Getting a handle on the opportunities for improvement in linking sustainability and brand strategy takes a clear understanding of the gap between what’s actually happening and what the public believes is happening. On one side is perception and brand image; on the other, operational reality.
Earlier this year, Brandlogic and CRD Analytics set out to help corporations start to build the information base and tools required to bridge this gap. We conducted a worldwide study covering 100 global corporations that contrasted their real and perceived performance in 2011 across all environmental, social and governance factors. On the perceptual side, we considered several highly attentive audiences crucial to corporations’ success: the investment community, purchasing and supply managers, and graduating students about to enter the workforce.
The study gathered and compared real and perceived ratings on each company at multiple ESG levels and across numerous performance factors. CRD Analytics, which supplies data for the NASDAQ Sustainability Index, provided ratings of the companies’ actual sustainability practices. These were paired with ratings of perceived performance developed by Brandlogic through a global perception survey. The resulting sets of data yielded two indices used in the study report: the Sustainability Reality Score (SRS) and the Sustainability Perception Score (SPS).
As shown in the Sustainability IQ Matrix, mapping real and perceived sustainability performance allowed us to organize companies into four quadrants, with significant differences between scores shown as large dots. Those quadrants are:
The matrix points to opportunities and risks surrounding sustainability. The Leaders in the matrix stand out not only for actual operational superiority and detailed reporting, but for the ways they have begun mastering the integration of sustainability into their vision, mission, values and brand communications.
Companies in the Challengers quadrant may be able to secure unrealized return on investment in sustainability through better communications. Key audiences may be making decisions based on inaccurate assumptions of actual performance.
On the other hand, companies considered Promoters could have considerable value at risk. They may enjoy current advantages – lower capital costs or better supply chain access perhaps – that may erode once their real performance is understood.
For more about the study and how different companies and sectors fared, you can download it at sustainabilityleadershipreport.com