This is a non-graphical version of the article. To save, please use your
browser File/Save function.
June 13, 2011
Study Compares Perception and Reality of Corporate ESG Risk Management
by Robert Kropp
A report from Brandlogic and CRD Analytics warns that companies whose reputations exceed actual
performance risk loss of value due to inaccurate assumptions by key stakeholders.
Environmental, social, and corporate governance (ESG) risks pose as much of a challenge to
corporate brands as they do to companies in emissions-intensive industries, although for somewhat
different reasons. If key stakeholders conclude that sustainability issues are important factors in
corporate performance, but conclude that a high-profile brand is not managing its ESG risks
sufficiently, then that company may find itself with considerable reputational risk on its hands.
Alternatively, if a company enjoys an underserved reputation as a sustainability
leader, then the potential for an eventual loss of confidence on the part of investors and others
A new report provides an interesting perspective on the gap that can exist
between actual corporate performance on sustainability issues and the perception of such
performance by key stakeholders. Entitled Sustai ability
leadership report: Measuring perception vs. reality, the report was conducted by Brandlogic, an employee-owned brand
consultancy, and CRD Analytics, a
sustainable investment research firm.
"The role played by sustainable practices in
stakeholder decisions represents a new and valuable input for both brand investment guidance and
reporting compliance," the report states. The study seeks to provide "executives with new tools for
managing corporate reputations and brands in a business environment that increasingly values good
To arrive at an analysis of the gap between perception and
reality, Brandlogic conducted a survey of the perception of the ESG performance of 100 major
corporations among purchasing and supply managers, investment professionals, and graduating
university students. According to the survey results, 88% of respondents consider good corporate
citizenship to be important, and 45% consider it to be extremely important. Brandlogic's survey
also found that of the three ESG pillars, social factors were considered by respondents to be the
Meanwhile, CRD Analytics measured corporate ESG performance according to
175 quantitative financial, environmental and social performance indicators. According to the
report, 93 of the metrics utilized by CRD Analytics were derived from the G3.1 Guidelines of the
Global Reporting Initiative (GRI).
Five key performance indicators (KPIs) were provided for each ESG pillar.
provides a comparison of reality and perception. Companies with high ESG performance were divided
into challengers—those who receive insufficient credit for their performance—and leaders, while
companies with poor ESG performance were either laggards or promoters. Promoters are those
companies "that are credited with ESG performance ahead of their actual achievements," according to
Companies whose actual performance exceeds perception "may be able to secure
unrealized ROI (return on investment) from sustainability investments," according to the report, as
knowledge by key constituents of their actual performance increases.
"The reverse also
applies," the report continued. "Those with high perception scores relative to reality may have
significant value at risk if this gap persists," because of "ESG vulnerability based on inaccurate
assumptions of performance." Several high tech companies fall into the category of promoters,
including Google, Apple, and Yahoo.
SRI World Group, Inc. All Rights Reserved.