Toyota’s leadership in making the environment a core management priority, while also engaging in a meaningful way with audiences around the world, has seen the company take out the top spot in Interbrand’s Best Global Green Brands 2011 report, which ranks the top 50 “green” brands with a global presence. But some of the very brands that ranked highly in environmental sustainability performance lagged behind when it came to public perception of their performance, suggesting many companies have a ways to go when it comes to communicating their corporate social responsibility efforts.
According to Interbrand, Toyota’s high perception score is due largely to the “iconic status” of its hybrid vehicle the Prius. Additionally, environmental sustainability is deeply engrained in the brand and has been a core management priority since 1992, when the company adopted its 'Toyota Earth Charter'. Over the years the results have included improvements on energy savings, water consumption, waste and toxic emissions.
Moving up from its eleventh-place ranking last year, Toyota has made a significant jump to reach the top spot for 2011, earning a points rating of 64.19. But it’s the company nipping at Toyota’s heels that has really made a quantum jump. Climbing up the green ladder from 90th place in 2010, 3M takes out second spot in the 2011 list with a points rating of 63.33. Siemens takes out third place with 63.08, Johnson & Johnson fourth with 59.41 and HP rounds out the top five with 59.06.
Adidas, which is busy trying to put a stop to the cheap supply of All Blacks jersey’s from the US, ranks 23rd on the list in spite of groups like Oxfam accusing the company of paying some of its factory workers in Asia as little as 60 cents per hour. The company is listed on both the FTSE4Good Index and the Dow Jones Sustainability Index.
According to the report, the strongest green brands consistently differentiate themselves and engage in green activities that consumers find relevant, as well as implement profitable green practices across their organisation, from setting and executing environmental programs to effectively measuring and reporting their performance to the public.
“As corporate citizenship increasingly becomes the norm, green initiatives may be among the most visible and easiest to claim and yet, can be the most challenging to deliver performance against,” says Jez Frampton, global chief executive at Interbrand. “We believe the strongest green brands lie at the intersection of performance and perception: their ability to build stronger connections with consumers as a result of actionable and credible environmental practices.”
A number of brands, including L’Oréal, Nokia, and HSBC, all scored significantly higher in performance than perception.
L’Oréal for example has a gap of 22.68. According to the report, L’Oréal should focus on communicating its strong performance beyond just its stakeholders – particularly its efficient energy and water consumption and emphasis on fair trade. Similarly, Nokia could be using its green activities to create meaningful connections with customers, as it continues to struggle with finding relevance in an increasingly competitive market. HSBC, which has no green branding to rally its efforts in climate change despite its good work in the area, could focus on the same.
On the flip side, consumers seemed to hold in high environmental esteem brands like McDonald’s, GE, and Coca-Cola, in spite of the fact their actual performance isn’t that great. The big gap in perception and performance for these brands, which are closer to the top of Interbrand’s Best Global Brands list, suggests these brands enjoy the positive impact of being a well-known, powerful brand, with green perception matching general perception overall.
And it seems even using the colour green is enough to convince some naïve consumers. The study suggests that McDonald’s use of the colour green has given consumers the perception that it is focusing more on environmental sustainability than reality.
Elsewhere, the automotive industry and electronics category lead the way not only in their ability to implement sustainable practices across their organisation, but also in their ability to communicate their efforts effectively to the public.
Other key insights from the report include:
Transparency and performance
It is important to note the central role that transparency plays in the table. Whereas some brands, like L'Oréal, are completely transparent about their work around environmental sustainability (which is one contribution to their high performance score), others, like Coca-Cola and Google, withhold a great deal of information (which may have impacted their performance score negatively). So, why do some companies opt for full transparency, while others continue to keep some of their work in this area to themselves?
In the case of L'Oréal, full transparency is likely a move to appease stakeholders. At the same time, however, it would serve the brand well to take the next step and communicate beyond just stakeholders to consumers too.
In the case of Coca-Cola and Google, which withhold a great deal about their performance, the goal may be to maintain a competitive advantage. Coca-Cola and Google are both innovating tremendously around environmental sustainability and reducing overhead considerably as a result. Sharing this knowledge would mean that competitors could potentially make the same corrections and see the same advantages. Indeed, Heinz’s move to license Coca-Cola’s plant bottle technology and Ford’s move to partner with Google on a prediction API to enhance hybrid efficiency may suggest that their work in this area is likely perceived as a valuable commodity by other brands.
Environmental sustainability: perception scores by country
Interestingly enough, Interbrand’s perception analysis reveals that expectations of brands in China are quite high. Indeed, brands received high scores green perception scores from this region. Closely following is India. Then Spain, Italy, the U.S., France, the U.K., and Germany. This pattern suggests that where green is a part of everyday life – for example, Germany, where green is regulated and mandated by the government and deeply ingrained in its citizens’ lifestyles – brands have more to live up to in terms of environmental sustainability. Conversely, in countries where green is a relatively new practice – China and India – consumers tend to rate brands higher in terms of green activity, as it activities in this area are less expected.
Environmental sustainability: perception scores by sector
As a whole, automotive brands received fairly high perception scores in comparison to their performance scores. This is likely because the automotive industry has been active in brand building in this area, showcasing hybrid models and additional products. Meanwhile, on average, electronics brands tend to score lower in perception than they do in performance, which suggests that they need to focus more on showcasing their green work.
In formulating its top 50 list, Interbrand conducted an evaluation of each brand’s consumer perceptions. Consumers in the 10 largest markets— US, Japan, China, Germany, France, UK, Italy, Brazil, Spain, and India—were asked how green impacts their purchase decisions and their overall understanding and awareness of the brand’s green activities as a whole.
Deloitte was also brought on board to develop an environmental sustainability performance methodology based on publicly available data as an input to Interbrand’s overall scoring methodology. The finalised score is a combined metric taken from both a perception and performance calculation. Taken together, the resulting difference or gap between these two scores represents the potential misalignment between brand performance and consumer perception.