-Both presence and quality of reports lead to higher brand values -The quality of reports also positively affects future brand values
Singapore, 16 September 2020 — A study of 100 leading brands in Singapore found that sustainability reporting is positively linked to their brand value. However, one-fifth of these brands do not engage in sustainability reporting. While greater disclosure leads to higher brand value, many brands inadequately report on the social and environmental aspects of their business. There is also a lagged effect as public perceptions take time to shape.
The study on the impact of sustainability reporting on brand value was co-authored by Associate Professor Lawrence Loh, Director at the Centre for Governance, Institutions and Organisations (CGIO) at National University of Singapore (NUS) Business School, and Ms Sharmine Tan, a graduate from the NUS Master of Science (Environmental Management) programme. The paper had been published in the peer-reviewed journal Sustainability on 9 September, in a special issue: Customer Relationship Marketing and Brand Management for Business Sustainability.
Associate Professor Loh, Director at CGIO, said, “Since the Singapore Exchange introduced a new ‘comply or explain’ listing rule in 2017 for listed companies to produce an annual sustainability report, the number of reporting companies had increased from 186 in 2017 to 327 in 2018. Still, this was fewer than half of all the listed companies in Singapore. This could mean that companies do not fully understand the potential value of sustainability reporting. Hence, we embarked on this study to examine the link between sustainability and brand value, and if more disclosures lead to higher brand value.”
Methodology
The study looked at 100 leading companies in Singapore by brand value in 2016 and 2018, as ranked by Brand Finance, an international brand valuation consultancy. Researchers calculated a sustainability score for each company based on how much they disclosed in their corporate websites, annual reports or other equivalent reports. The scoring was guided by the Global Reporting Initiative Standards. 50 per cent of the score was based on the company’s key reporting principles and governance. The other half was based on how much the company disclosed in terms of the economic, environmental and social aspects.
Findings
The researchers found that sustainability reporting has a positive impact on brand value. They noted, however, that about one-fifth of these 100 brands did not produce any form of sustainability disclosures.
Among the 100 brands, the five least disclosed indicators were, in ascending order of disclosure (with (1) being the least disclosed): (1) biodiversity; (2) product and service stewardship (the journey from cradle to grave); (3) human rights; (4) economic impact from climate change; and (5) labour practices and industrial relations.
The analysis also showed that reports of higher quality garnered a higher brand value. Ms Tan, a Sustainability Project Analyst at CGIO during her Master’s candidature, said, “A higher quality report has detailed disclosures which are substantiated with performance measurements and targets. When a company can say concretely how it intends to bring down its carbon footprint, or counters its operational risks, for example, consumers and investors will trust it more.”
The trust may not come immediately. Analysing the leading brands that produced sustainability reports in both 2016 and 2018 (numbering 63 out of 100 brands), the researchers found that the quality of the report has a lagged effect of a few years on its brand value.
“Companies may not focus on sustainability reporting as they can’t see its effect and benefits now,” said Ms Tan. “But if they don’t meet stakeholders’ demand for fair practices today, they may miss out on building future brand value. Companies can take progressive steps to address their environmental and social impact, including that of their supply chain, to increase investors and stakeholders’ trust.”
Assoc Prof Loh said, “Ultimately, a company needs to internalise its sustainability vision by consulting its various stakeholders. Many companies now have one department or just one employee being responsible for sustainability, but this should shift towards a shared responsibility across all levels and departments.
“We also recommend companies to develop meaningful metrics to demonstrate success in their sustainability efforts, such that investors and consumers recall their brand in a favourable way. It will pay off in the long run.”
For media enquiries, please contact:
ANG Hui Min Manager, Corporate Communications NUS Business School National University of Singapore Tel: +65 6601 5857 Email: huimin19@nus.edu.sg
About National University of Singapore (NUS)
The National University of Singapore (NUS) is Singapore’s flagship university, which offers a global approach to education, research and entrepreneurship, with a focus on Asian perspectives and expertise. We have 17 faculties across three campuses in Singapore, as well as 12 NUS Overseas Colleges across the world. Close to 40,000 students from 100 countries enrich our vibrant and diverse campus community.
Our multidisciplinary and real-world approach to education, research and entrepreneurship enables us to work closely with industry, governments and academia to address crucial and complex issues relevant to Asia and the world. Researchers in our faculties, 30 university-level research institutes, research centres of excellence and corporate labs focus on themes that include energy, environmental and urban sustainability; treatment and prevention of diseases common among Asians; active ageing; advanced materials; as well as risk management and resilience of financial systems. Our latest research focus is on the use of data science, operations research and cybersecurity to support Singapore’s Smart Nation initiative.
For more information on NUS, please visit www.nus.edu.sg.
About NUS Business School
The National University of Singapore (NUS) Business School is known for providing management thought leadership from an Asian perspective, enabling its students and corporate partners to leverage global knowledge and Asian insights.
The school has consistently received top rankings in the Asia-Pacific region by independent publications and agencies, such as The Financial Times, Economist Intelligence Unit, and QS Top MBA, in recognition of the quality of its programmes, faculty research and graduates.
The school is accredited by AACSB International (Association to Advance Collegiate Schools of Business) and EQUIS (European Quality Improvement System), endorsements that the school has met the highest standards for business education. The school is also a member of the GMA (Graduate Management Admission) Council, Executive MBA Council, Partnership in Management (PIM) and CEMS (Community of European Management Schools).
For more information, please visit bschool.nus.edu.sg.
About the Centre for Governance, Institutions and Organisations
The Centre for Governance, Institutions and Organisations (CGIO) was established by the National University of Singapore (NUS) Business School in 2010. It aims to spearhead relevant and high-impact research on governance and sustainability issues that are pertinent to Asia, including corporate governance, corporate sustainability, governance of family firms, state-linked companies, business groups, and institutions. CGIO also organises events such as public lectures, industry roundtables, and academic conferences on topics related to governance.
NUS Business School is known for providing management thought leadership from an Asian perspective, enabling its students and corporate partners to leverage global knowledge and Asian insights.
The School is one of the 17 Faculties and Schools at NUS. A leading global university centred in Asia, NUS is Singapore’s flagship university, which offers a global approach to education, research and entrepreneurship, with a focus on Asian perspectives and expertise. Its transformative education includes a broad-based curriculum underscored by multi-disciplinary courses and cross-faculty enrichment. Close to 40,000 students from 100 countries enrich our vibrant and diverse campus community.
