CSRHub Blog Research on ESG metrics and comments on sustainability best practice

Interbrand's Weakest Link: Real World Financial Value

[fa icon="calendar"] Aug 3, 2011 3:03:29 PM / by Carol Pierson Holding

By Carol Pierson Holding

Unnamed The branding agency Interbrand just released their first report on the Best Global Green Brands. It’s a wonderful study, looking at both green performance and perception and identifying the gaps. It just doesn’t go far enough. The report never connects its measurements to dollar values. By missing this opportunity, Interbrand fails its corporate subscribers by not providing numbers that would support rational investment in the environment, as I will explain later.

But before I do, I want to make clear that this is more than just another promotional gambit from a branding agency. It is tempting to make that assumption: Interbrand is the agency famous for that mastery of promotion, the Best Global Brands study that is the basis for a once-a-year cover article for Business Week. Clearly, Best Global Green Brands is also a bid for business: a majority of the companies studied have a deficit not in a company’s green performance but in perceptions of that company’s green. Interbrand’s core business is to help correct that imbalance, so each company report is a potential new business generator.

Nonetheless, I saw the Interbrand report as going far beyond promotion. For the first time, a branding company is not just reporting measures of perception but also performance.

Interbrand’s stated reason? With the Internet and social media, actual performance must match communication or the imbalance will be outed and attributed to greenwashing. Even before our social media age, I argued that communication is a critical component to environmental efforts, that only by giving voice to their acts of good citizenship and thereby leading consumer behavior can corporations truly do good. In fact, in a previous blog comparing Bill Gates’ environmental efforts to BPs, I complained that Gates was missing a huge opportunity by not talking up Microsoft’s Hohm energy monitoring system in his climate change talks. Performance and branding together achieve maximum results. But the branding side is still not entirely accepted, in part because it occupies a different silo within the corporation – and in part because there are no measures of what the two combined can achieve. And without metrics, brand and the environment would remain in their separate silos, which limits investment in environmental efforts, especially in poorly performing economies.

This problem bugged me for years. Finally, in 2006, with the help of a Fortune 50 sponsor, a brand valuation company and an SRI data provider, I found a way to measure the impact of CSR on brand. We split CSR into the categories that our SRI partner provided, one of which was environment. What metric did that study use? The only one that has any impact, financial performance. We actually computed a dollar value for an increase in the performance of every category of CSR and one for an increase in branding. So I know it’s possible.

That’s what I missed in the Interbrand study. Without a link to financial values, Interbrand’s numbers can’t connect brand-environment to the bottom line. Without this connection, the brand-environment connection can’t be monetized; corporations can’t establish rational budgets for environmental programs or environmental branding. Most important, environment remains an intangible asset, unmeasurable in contribution to profit and therefore most at risk of being cut.

It would be so easy for Interbrand to add these dollar values. Their Top 100 Green Brands data was built in part on Asset4 data. Asset4 is an SRI vendor, providing data primarily to Socially Responsible Investors. (Full disclosure: Asset4 also provides data to CSRHUB, a web-based sustainability ratings provider.) Asset4 has already integrated stock price into their ratings, so to develop an algorithm that would distill various components to their dollar value should not be that tough. I hope that the next iteration of this valuable study will do just that.

Carol Pierson Holding is a writer and an environmentalist; her articles on CSR can be found on her website.


Topics: Best Global Green Brands, corporate social responsibility, CSR, socially responsible investing, sustainability, Interbrand, Carol Pierson Holding, corporate responsibility, CSRHub, SRI

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