Sustainability Perceptions Index 2023

The report on the value of sustainability perceptions to the world's leading brands

World’s Biggest Brands Could Stand to Lose Billions from Poor Management of ESG Perceptions

·       First of its kind study places value on brands’ reputation for sustainability

·       Amazon tops the table with a sustainability perceptions value of $19.9bn

·       Tesla is seen as one of the most sustainable brands, with sustainability driving 26.9% of value for the EV manufacturer

A first of its kind study has revealed the financial value of sustainability perceptions of the world’s biggest brands. The Brand Finance Sustainability Perceptions Index, released today in association with the International Advertising Association at the World Economic Forum in Davos, reveals that major global brands such as Amazon, Tesla, Apple and Alphabet each have billions of dollars contingent on carefully managing a reputation for commitment to sustainability.

Amazon has the most at stake with a sustainability perceptions value of US$19.9 billion. Other notable brands at the top of the ranking include Tesla (US$17.8 bn), Apple (US$14.65 bn), and Google (US$14.6 bn).

Brand Finance Strategy and Sustainability Director Robert Haigh commented, “For the first time, companies can now see the financial value that is tied to a reputation for acting sustainably. Whether they are seen as sustainability champions or not, the world’s biggest brands have hundreds of millions of dollars’ worth of value contingent on how sustainable they are perceived to be”

Dagmara Szule, Managing Director, IAA Global commented, “We see this as an incredibly potent tool to incentivize action in line with the UN SDGs and wider aims of the UNGC. By highlighting the financial value that is contingent on sustainability perceptions, we hope to harness businesses’ profit motive, moving them past the point where they see sustainability as a ‘hygiene factor’, to a point of rapid, concerted action.”

As part of the analysis, Brand Finance determines the relative importance of sustainability as a driver of value for brands. This relevels that Tesla is particularly financially reliant on sustainability perceptions. 26.9% of Tesla’s brand value is associated with a reputation for sustainability.

In fact, the Luxury Autos sector accounted for a number of brands that performed extremely well in terms of sustainability perception, such as Porsche and Mercedes-Benz. The research has revealed the important role of sustainability perception in driving choice amongst consumers in the sector, reflected through an average driver score of 22.9%.

Mr Haigh continued, “It might seem counterintuitive that brands associated with high fuel consumption are so reliant on a reputation for sustainability. However our research has found that at the premium end of all sectors, sustainability plays a powerful role. In luxury auto, where the purchase is discretionary and the brand is publicly expressed, the role of sustainability is further enhanced.”

As part of the analysis, Brand Finance also evaluated how sustainable each brand is perceived to be, allocating a ‘Sustainability Perceptions Score’. This strips back the impact of revenues to see which brands consumers think are the most committed to sustainability. Tesla, IKEA and Patagonia performed well across a wide range of markets. Lush and The Body Shop scored very highly in the UK. In France, Yves Rocher and tyre brand Michelin stood out, while Brazilian cosmetics giant Natura scored highly in its home market.

Further Brand Finance research revealed consumers are typically fairly trusting of brands’ sustainability related communication, with 62% believing claims about sustainability made by brands. However, 79% of consumers also said that they had reduced their use of a brand having discovered it was acting in an unsustainable way, reinforcing the imperative for brands to communicate clearly, authentically and accurately.  

Robert Haigh concluded, “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.”