Sustainability: Perception vs. Performance
September 17, 2012
Last year, an inaugural study was conducted by CRD Analytics (a sustainability research firm) and Brandlogic (a brand consulting firm) called the "Sustainability Leadership Report."
For those of you who haven't seen it, this study was an attempt to match actual corporate sustainability performance (defined as a combination of environmental, social and governance practices) with perceptions among investment professionals, purchasing/supply management professionals, and graduating students from the U.S., China, Japan, Germany, India and the U.K. 100 prominent brands were studied using publically available information.
The objectives of the study were threefold:
- To provide new insights on the opportunities and risks global corporations may face in the investment community, among supply chain partners and in the market for talent;
- To provide an objective basis for companies to take internal initiatives that address the highlighted opportunities and risks among key constituencies by identifying specific, priority areas for potential investment and action; and
- To establish a statistically valid approach and benchmark for measuring perceived progress over time on both the actual and perceived dimensions of sustainability performance.
The study grouped these 100 companies into four quadrants:
- Leaders: firms that have relatively high sustainability performance and are successfully communicating their achievements
- Challengers: firms that are not getting enough credit for their actual sustainability performance
- Promoters: firms that are credited with sustainability performance ahead of their actual achievements
- Laggards: firms that have shown a relatively low level of commitment to sustainability
The study revealed a number of key findings and insights:
- Social factors (product responsibility, community, human rights, diversity and opportunity, employment quality) were on average twice as significant as either environmental or governance factors in determining survey respondents' perception of good corporate citizenship.
- When asked about the importance of good corporate citizenship in respondents' decision-making, an overwhelming majority (85%) stated that it is "important" while nearly half (45%) viewed it as "extremely important."
- From an industry standpoint, pharmaceuticals stood out with almost all surveyed companies (e.g., Merck, GlaxoSmithKline, Pfizer) leading in both actual and perceived performance, and several IT companies (e.g., IBM, Intel, Cisco, Microsoft) also displayed leadership in both measures.
While American Express (and other financial services firms) did not fare well in this particular study, it is helpful from the standpoint of identifying gaps in the manner and frequency of our public reporting. Because this study was conducted using publically available information, it points to the increasing importance of transparency and accountability in our work.
So, we take the study results as a challenge and opportunity to communicate better rather than an indication of our actual performance (which we believe is better than this study would suggest).
If you have any comments or questions, please share them here.
P.S. Did you know that the Global Reporting Initiative (GRI) is a nonprofit organization that promotes economic, environmental and social sustainability? Since 1999, thousands of companies across all sectors have published reports that adopt some or all of the GRI's Sustainability Reporting Framework and Guidelines.