Today, most companies—driven chiefly by a practical need to reduce operational costs—are making efforts to “go green.” While the usual areas of focus like energy efficiency and water conservation remain key components of a greener business, these measures don’t always leave a strong impression on consumers. If a brand’s idea of corporate citizenship is a one-off philanthropic gesture now and then or if sustainability efforts are behind the scenes and only focused on mitigating risk or reducing costs, a brand may be missing opportunities to educate, inspire, engage and ultimately lift brand value.

In Interbrand’s just-released Best Global Green Brands 2013 report, we examine sustainability performance, but also how consumers perceive the sustainability efforts of top brands. In the study we conducted, we found that, overwhelmingly, consumers look to the products and services that a brand offers as proof of their commitment to environmental sustainability. This is one explanation for the high performance of the automotive sector in this year’s report. These brands have invested in creating innovative products that serve as clear evidence of their commitment to sustainability (e.g., Toyota Prius, Ford EcoBoost, Nissan LEAF) and as a result, are receiving more recognition from consumers.

People tend to trust what is more visible to them, what is real and tangible—which is why the products and services they actually use, along with marketing and messaging for those products and services, make more of an impact on them than corporate claims of sustainability. In fact, in our study, a third of respondents globally agree that the environmental activities of different companies seem very similar (31 percent) and 35 percent do not trust information given by a company about its environmental efforts. So, if operational performance is not enough to gain favor with consumers because a significant number don’t trust corporate reporting or have no awareness of what a company is doing—what lever can a brand pull to build and truly capitalize upon its green reputation?

Our research around consumer perception of brands’ sustainability efforts in ten countries shows that it’s a small but significant influential factor that, all other attributes being equal, the perception that a brand is a good employer, good to the earth, practices what it preaches, and otherwise displays the characteristics of a good corporate citizen, it will be chosen versus a competitor. (Read more in Emily Grant and Chloe Frank’s article, The Contribution Equation.)

At the end of the day, having the power to influence choices translates into money. The key to that power is the brand, its image, reputation and the multitude of messages, gestures, and efforts that build the collective perception of who it is, what it stands for—and how trustworthy it is. Today, it's no longer enough to make progress toward sustainability targets and publish these accomplishments in a sustainability report—and, in the age of social media, greenwashing is no longer an option either.

To stay socially relevant, businesses need to give back in significant ways, communicate about these actions and work to overcome cynicism, while building a reputation that fosters trust and inspires both admiration and participation. As Interbrand’s global Corporate Citizenship practice leader, Tom Zara, puts it: “With all this power to influence, drive demand, and inspire loyalty, brands are uniquely positioned to bring solutions to the marketplace…[And] as concern about the environment, the treatment of workers, and long-term sustainability grows—corporate citizenship will increasingly determine which brands consumers invite into their lives.”

Erica Velis is the content editor and lead writer for Global Marketing and Communications at Interbrand.

As part of the Best Global Green Brands 2013 (BGGB) launch this week, Interbrand hosted an event at The Guardian newspaper's headquarters in London. With luminaries from the world of sustainability and branding in the room, and a panel-based format, the debate was always likely to be engaging and interesting. Here were the stand-out points I took note of:

Firstly, Jez Frampton asked the crowd who had three or more old mobile phones in their drawers and cupboards at home and the majority of the audience put their hand up (including me). This illustrated why Apple, among our top global brands, slipped down the BGGB ranking: product disposal is not something they are addressing actively enough.

Jake Backus, Customer Sustainability Director for Coca-Cola was a panelist. Coke is more interested in what they call casual greens rather than dark greens, as there are more of them, plus they’re looking for brands to help them be better consumers. They want their preferred brands to be more sustainable, rather than looking for the most sustainable brand in the marketplace. There’s an opportunity for leading brands to take note from Coke.

The panellists agreed that sustainability is a genuine unfulfilled business opportunity. Consumers do want great products that are better for the world. But they don't want to compromise on quality, performance or convenience. This is a huge opportunity for businesses and brands with R&D resources at their disposal. An example cited by Jake Backus was Coke’s I LOHAS water product, which has taken Japan by storm, in part because of its environmental credentials (although dark greens would probably be uncomfortable with claiming imported bottled water qualifies as "sustainable").

As the above example demonstrates, sustainability can be part of a growth strategy. This is particularly true in developing markets, where consumers credit brands that innovate in sustainability with technical excellence and therefore assume their products are superior.

There was an interesting contrast between BMW and Nissan. BMW recognised that to build a successful ground-up electric car they had to set up a business unit that was entirely outside of the core business. Nissan, meanwhile is looking to put sustainability much more at the heart of the business.

And I loved the idea that we, as brand stewards, should be looking at foresight rather than insight. The consumer wants to be led, and asking them what they want now will not result in leadership.

Finally, leadership itself was a key topic. I heard Coke talk about being very aware of its "social license to operate." Taking a leadership position on the issues it can and should be influencing – child obesity being the obvious one – is a responsibility they’re not ducking.

If last night’s event was anything to go by, our BGGB study is stimulating exactly the kind of debate we had in mind. I’m looking forward to following the feedback.

Fred Burt is the Managing Director of Global Accounts at Interbrand.

Today is the 115th anniversary of Ransom Eli Olds’ founding of Olds Motors Works, which later became Oldsmobile. Bought in 1908 by GM and dissolved in 2004, it was the oldest continuously operating automaker in the US. The global auto industry landscape has certainly changed since 1897, but the spirit of innovation of pioneering brands lives on today.

Today eight out of the fifty Best Global Green Brands 2012 in Interbrand’s report were automobile companies from Japan, Germany, the USA and South Korea. All of these brands were in the top 25. The same creative passion that led Olds to complete his first gasoline-powered vehicle in 1896 and begin mass-producing his curved-dash automobile in 1902 using a progressive assembly-line system, is unlocking new approaches to design with sustainability in mind.

Once considered the experimental division of GM, Oldsmobile introduced the “safety automatic transmission” in 1938 and introduced its revolutionary V-8 Rocket Engine, often credited with being the first muscle car, in 1949. Today brands are garnering reputations as great experimenters and problem solvers, designing cars with smaller carbon footprints.

Toyota topped the BGGB 2012 list, recognized for its “unparalleled sustainability leadership” and demonstrating that “sustainability is deeply ingrained in the company’s culture.” Hybrid and Toyota’s Prius have become synonymous for many consumers, helping shape a perception of the brand as cutting-edge.

Honda, VW, BMW, Ford, Mercedes, Hyundai and Nissan also made the top 25 with innovations in waste, emissions, and toxicity reduction in production, process and products. Nissan’s Global Head of Digital Marketing DeLu Jackson spoke with Interbrand about its commitment to eco-friendly innovation.

Olds had a vision of focusing on small cars, but his board of directors and financial backer wanted to build large luxury cars. Olds left to found Reo Motor Car Company.

The term “luxury car” has become ubiquitous today, as has the term “luxury” itself, as discussed in Interbrand Milan’s Managing Director Manfredi Ricca and European Director Rebecca Robins’ book, Meta-luxury: Brands and the Culture of Excellence. 

Ricca and Robins note, “As we have seen, the term ‘luxury,’ has been overexposed, overstretched, deformed and diluted, and as a result is now worn out beyond recovery.” In defining meta-luxury and clarifying its distinction from luxury, the authors note the importance of key elements. Focus is one of these pillars of meta-luxury.

“After all, most of the brands known today as luxury brands originate historically from the founder’s vision and dream to represent the pinnacle with regard to a certain field,” they contend. “…The difference is, in fact, between those brands for whom this commitment to excellence is merely the past, and those for which it is the constant future.”

They note that brands such as Rolls Royce had their origins in dedicated focus, “stemming from the passionate engineering and design talent of Sit Henry Royce,” which continues today. The brand “retains that focus and has refrained from widening its offering to include other products inspired by an undoubtedly profound and universally recognized heritage.”

Despite global economic uncertainty, meta-luxury brands weathered the crisis, from explorer yachts to French fashion houses.  Luxury car brands like Porsche are experiencing booms despite the financial woes in Europe and some brands have discovered new opportunities during the crisis.

On the flip side, the small, economic cars of Olds’ vision have been hot sellers for a number of global car brands and June was a very good month for American car sales. 

Chrysler, as brandchannel reported, has announced a new Customer Service Initiative as it looks to overhaul how it works with its dealers to encourage sales. With solid sales figures and a healthier dealer base, Chrysler says it’s confident in its new program.

Noted in the brandchannel piece, Fiat’s purchase of a 35% stake in Chrysler was one of the contributing factors to its current health. Fiat itself is seeing significant success in its sales in the US, surpassing predictions.

As Jez Frampton noted in his foreword to Meta-luxury, “The recent economic trials and tribulations force us to look hard at our values, and what we value. In times like these, we anchor ourselves to unquestionable truths and authenticity, and we look for objects, experiences and stories that remind us of what we value as individuals. Some brands manage to reflect these truths.”

While Oldsmobile is gone, Olds’ vision for innovation and value left a lasting impact on the auto industry. Those brands consistently creating solid value whether meta-luxury or economy, those innovating in sustainability and those willing to try new ways to service their customers are thriving.

Amy Edel-Vaughn is Interbrand's Community Manager.

Sustainability is not just good business, it is smart business. Leading companies recognize this, but do they achieve the best possible results for both the planet and their brand?

Traditionally, environmental practices have been viewed as a way to increase profitability – to reduce material usage, for example, or improve energy efficiency. Mitigating risk has also pushed sustainability up on the corporate agenda. For global enterprises this could involve anticipating regulatory changes or ensuring the long-term viability of production facilities. More recently it has become clear that green thinking is central to driving innovation and can positively impact sales.

Brand owners, however, need to widen their horizons and look beyond straightforward business benefits. There are other potential benefits to the brand that often go ignored. Brands that do not adequately communicate their environmental achievements are failing to maximize their investment in sustainability.

Interbrand's global Corporate Citizenship Study showed that good deeds, including green activities, play a significant role in increasing favorability, contributing between 13% and 17% to positive impressions of a brand. The benefits do not stop there. For selected audiences, the impact can be even greater. Internally, people feel more motivated working for a company that is perceived to be doing good, making it easier to attract and retain top talent. Externally, investors and business customers are placing increased emphasis on sustainability as they look for long-term security and partners to help them achieve their own environmental goals. This means that any brand engaged in green activities should be taking the time to tell the public what they are doing.

The 2012 Best Global Green Brands study suggests that many leading companies fail to recognize the full potential of green branding. The report looked at both actual environmental actions and market perceptions of the world's best corporate brands. Among the fifty companies ranked, around thirty have a positive gap, meaning they are not being fully credited for their activities and so are missing the opportunity to build stronger relationships with stakeholders.

Perhaps the most striking examples can be found in the electronics industry. Eleven of the twelve leading global brands from the category recorded an above-average assessment of their environmental activities. However, only Apple received public recognition in line with actual achievements.

To address a positive perception gap, brands need to create differentiated green communications by finding original, credible territories where they can claim leadership. Given the complexity of environmental issues, it is important that this should be a tangible activity, or an easy-to-understand concept that is relevant to the audience.

Any green communication strategy needs to take into account the complexity of differing local views of environmental issues as well as the need to cut through the clutter of green badges and conflicting claims with a simple set of global messages backed by proof points.

A word of caution – credibility is critical with a topic as emotive as the environment. Actions should always precede words. If people believe the brand is doing more for the planet than it actually is, there is a potential risk.

However, before condemning any brand as a “green washer,” we should pause to consider several potential factors behind a negative gap. In addition to high-profile brands that enjoy a positive halo from being well-known and well-liked, there are examples of pioneering brands that are assumed to be top performers because of their thought leadership. It would be simplistic to criticize these brands without recognizing the impact they have pushing the green agenda to the forefront as a serious business topic.

Nevertheless, there are risks for brands that do not live up to their public pronouncements. Brands need to ensure that they are delivering on their core promises as well as managing public expectations. In the age of social media, people expect transparency even if it means admitting to weaknesses or imperfections. This should not discourage brands from engaging in dialog about complex issues.

For meaningful change to occur in our relationship with the planet, information on sustainability has to be communicated to everyone and options for green lifestyles have to be made available to all. With their prestige and immense resources, global brands are well-positioned to realize this through their words, actions, and leadership.

Alex Murray is a Strategy Director at Interbrand Tokyo.

Welcome back to Demand and Desire: Interbrand’s series of podcasts about the art and science of branding.

This time: a look at Interbrand's newly launched Best Global Green Brands report 2012.

Jez Frampton, Global CEO of Interbrand, and Dave Pearson, Global Sustainability Leader of Deloitte Touche Tohmatsu Limited discuss the business opportunities of sustainability.

Brands are finding that there is a real value to being sustainable. With a growing focus on sustainability, brands are finding opportunities to innovate, creating new products and engaging with consumers in new ways.

Brands should take heed, though. It's not enough to talk green. Performance must be there and sustainability efforts need to be effectively communicated to the public. It’s all about the balance between performance and perception.

Interbrand, the world's leading brand consultancy and author of the annual Best Global Brands report, has released its 2012 Best Global Green Brands report. Performance data in the report is powered by Deloitte. The report identifies the gap between customer perception and a brand's performance relative to sustainability.

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