Marketing & Communications

Greenhushing:
World’s Biggest Brands Leaving Billions on the Table

Brand Finance finds the world’s biggest brands are missing out on billions of dollars of potential value by failing to properly communicate their sustainability achievements and progress.

Published 9 months ago | About a 4 minute read

Image: Microsoft

The latest edition of the Sustainability Perceptions Index — produced by London-based brand-valuation consultancy Brand Finance, in association with CSRHub and the International Advertising Association (IAA) — indicates that the world’s biggest brands are missing out on billions of dollars of potential value by failing to properly communicate their sustainability achievements and progress.

As sustainability claims are more widely scrutinized, by both the public and regulators, companies may be tempted to stop talking about their efforts altogether, for fear of greenwashing accusations. But the risks of brands avoiding the topic to protect their reputation have much farther-reaching implications than they may think.

“We see this as an incredibly potent tool to incentivize action that aligns with the UN SDGs and wider aims of the UN Global Compact,” says Dagmara Szulce, Managing Director at IAA Global, says of the Sustainability Perceptions Index. “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.”

Last summer, Brand Finance released its Sustainability Gap Index — which exposed whether public perceptions of a brand’s sustainability performance align with its actual performance, and the substantial financial risks associated with any gap. Now, the latest Sustainability Perceptions Index — based on a study of over 150,000 respondents across 40 countries — digs further into these risks. Key findings include:

the role of sustainability in driving choice in each industry
the brands that global consumers believe are most committed to sustainability
the financial value of a reputation for sustainability
the value at risk, or value to be gained, arising from a gap between sustainability perceptions and performance.

Standout brands

According to the report, Apple has the highest sustainability perceptions value of any brand — at US$33.3 billion. This huge sum is driven by a combination of Apple’s financial scale and supportive consumer perception. Actual sustainability performance aside, the research shows that consumers have clear confidence that Apple is committed enough to minimizing its negative impacts for them continue buying and paying a premium for its products.

Microsoft has the second highest total value (US$22.7billion) — along with the highest “gap value” of any brand in the index at US$3.2 billion. The tech giant has engaged extensively in sustainability initiatives — including committing to becoming carbon neutral, water positive, and zero waste by 2030; and erasing its 45 years’ worth of carbon emissions by 2050. Yet its communication of its commitment and progress has been somewhat muted. According to Brand Finance’s calculations, with concerted effort to communicate its sustainability achievements more effectively, Microsoft could add over US$3 billion of value for shareholders.

Microsoft is not alone in leaving value on the table in this way: According to the Index, 85 brands have a positive gap value of over US$100 million, totalling US$25 billion.

At the other end of the spectrum is Tesla — well known as a pioneer of the electric vehicles and battery technology aiding in the transition to a lower-carbon economy. This image has carried across into the sustainability perceptions held by global consumers. In several countries, including Mexico and the UK, Tesla is regarded as the brand with the greatest commitment to environmental sustainability. However, the strength of this perception creates its own risk; whilst Tesla performs fairly well on perceived sustainability, it falls significantly short of peer average on sustainability performance. As a result, Tesla has US$1.54 billion of value at risk.

“Brands have to strike a fine balance when communicating about sustainability,” explains Brand Finance’s Strategy & Sustainability Director Robert Haigh. “Consumers are now rightly attuned to potential greenwashing; in response, brands are becoming too precautionary and restrictive in their approach to sustainability communications. This greenhushing could reduce the incentive for competitors to improve their performance, slowing progress industry-wide. Just as importantly, these brands are letting financial go to waste — short-changing shareholders and other stakeholders in the process.”

Check out the full report for the full ranking, additional insights, charts, and more information about the methodology.