How Greenhushing Prevents Brands from Capturing Additional Value
By failing to communicate their progress and achievements in sustainability, global brands are potentially losing out on billions of dollars of financial value, finds a new report from Brand Finance.
The latest Sustainability Perceptions Index – launched at the 2024 IAA World Congress in Malaysia – highlighted the problem of greenhushing and how it prevents brands from taking action.
Why greenhushing matters
Sustainability is a business imperative, but it is difficult for business leaders to make a convincing financial case and demonstrate the return on value to investors. While brands are concerned of greenwashing accusations, those who are greenhushing – avoiding talking about their sustainability efforts altogether – miss out on capturing significant brand value for shareholders.
Calculating the Sustainability ‘Gap’ Value
Brand Finance runs a perception versus performance gap analysis on sustainability information from CSRHub, an aggregator of public information, disclosures, and ESG ratings and rankings on global brands.
The study puts a financial value on potential growth opportunities (greenhushing) and value at risk (greenwashing). The initial Sustainability Perceptions Value is subtracted from this performance-based value to determine the Sustainability ‘Gap’ Value.
Takeaways
- The perceptions that consumers hold about a brand’s commitment to sustainability are rarely aligned with reality; this can present risks but also opportunities.
- If brand performance exceeds perception, there’s an opportunity to capture value via ‘enhanced’ communication. “There are many companies where brand perception is not as good as the true performance of the brand. That’s hundreds of millions of dollars sitting there waiting to be had as a result of improved demand,” says David Haig, founder and CEO of Brand Finance.
- Among the top 10 brands with the most positive gap value are Microsoft (3,156m), Apple (1,604m), and Google (1,529 m).
- However, the study identified Tesla as a brand with a negative gap value. Despite holding a Sustainability Perceptions Value of USD$13.7 billion, it falls significantly short of peer average sustainability performance across all three dimensions of ESG. As a result, Tesla has USD$1.5 billion of value at risk.
Key quote
“Brands must make a financial and economic case for sustainability. Don’t assume that everyone is just going to like it because it’s purpose-driven. Purpose has got to equate to lower costs, greater loyalty, higher demand, better price” – David Haigh, Founder & CEO, Brand Finance.
Credit: Brand Finance, WARC