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

By Jennifer Saunders and Bahar Gidwani

Many aspects of a company’s performance affect its brand value. Marketing spend, distribution strength, and product quality all have proven effects. This study indicates that a company’s perceived sustainability performance may be another important factor.

In 2013, CSRHub showed that its measures of perceived corporate sustainability performance had a 28% correlation with Brand Finance’s Brand Strength Indicator (BSI). CSRHub recently published an update that showed this correlation continues to persist for financial companies. This study extends our analysis to include three other independent brand ranking systems:

• RepTrak Pulse Score.  The Reputation Institute’s RepTrak model examines the relationship between the emotional connection, or “Pulse” score, a “measure of the degree of Admiration, Trust, Good Feeling and Overall Esteem that a company stakeholder holds.”
• Interbrand’s Best Global Brands list.  Interbrand provides an analysis and picture of how your brand is contributing to business results today. Interbrand publishes annually a “Best Global Brands” list of the 100 brands it considers most powerful.
• CoreBrand’s CBI.  Tenet Partners’ CoreBrand Analytics group  generates an annual Corporate Branding Index (CBI) that measures and quantifies the impact of investment in the corporate brand and how brands perform against peers both across and within industries.

We compared data from these sources with CSRHub ratings and brand strength data from our long time data source in the branding area, Brand Finance. CSRHub provides sustainability information on more than 14,000 companies in 127 countries. CSRHub’s ratings and metrics are drawn from more than 380 sustainability data sources.Our research found that the scores from all four leading brand ranking systems correlated with at least one of CSRHub’s sustainability measures. Further, we found consistent results across the four systems that may help brand managers better understand how to coordinate with and support their company’s sustainability programs. In particular, we found a positive correlation between brand and Compensation & Benefits and Environment Policy & Reporting strength. Success in these areas seems tied to better brand rankings.

To see the complete details and next steps, download the full report here.

About the Authors

Jennifer Saunders holds a degree in chemical engineering from Melbourne University, a postgraduate diploma in management from the Melbourne Business School, and certificates in sustainability reporting and stakeholder networks approaches to socio-political risk. She worked for design and manufacturing multinationals for 15 years. Her main focus was on engaging cross-functionally to collect and analyse design performance data, report on sustainability metrics, optimize processes and manage supply chain projects. She recently re-located from Australia to the Pacific Northwest where she has further fostered her career to focus on sustainability working with CSRHub.

Bahar Gidwani is CEO and Co-founder of CSRHub.  He has built and run large technology-based businesses for many years. Bahar holds a CFA, worked on Wall Street with Kidder, Peabody, and with McKinsey & Co. Bahar has consulted to a number of major companies and currently serves on the board of several software and Web companies. He has an MBA from Harvard Business School and an undergraduate degree in physics and astronomy. Bahar is a member of the SASB Advisory Board.  He plays bridge, races sailboats, and is based in New York City.

About CSRHub

CSRHub provides access to the world’s largest corporate social responsibility and sustainability ratings and information.  It covers over 14,000 companies from 135 industries in 127 countries. By aggregating and normalizing the information from 380 data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices, and seek ways to improve corporate sustainability performance.

By Carol Pierson Holding

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.