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How Sustainable is the World's Most Valuable Company?

By Denis Riney

Currently, Apple holds the enviable title of the world's most valuable company. But where does Apple stack up when it comes to its sustainability performance?

In our 2012 Sustainability Leadership Report, which measures real vs. perceived performance on environmental, social and governance (ESG) factors for 100 leading global brands, Apple has for the second year in a row clocked in as a Promoter. This rating means that like 2011, Apple's perceived ESG performance is greater than the study average, while its real performance is below the study average. (See the Brandlogic Sustainability Leadership Report for background on how the report was created.)

On the reality side, Apple made significant gains from 2012 to 2011, improving their SRS score from 29.3 to 45.8, a 16.5 point increase vs. a 9.3-point increase for the 100 companies overall. Its perceived ESG scores increased as well, from 53.5 to 55.6, in year when the average perception score dropped 2.7 points.

The split in perceptions by geography couldn't be more varied. Among audiences in the developed world (US, UK, Germany and Japan), Apple's SPS score improved by 8.1 points, with the environmental (2.6+) social (9.6+) and governance (10.1+) components all increasing. In the newly developing world, the SPS score for China and India dropped by 8 points year over year.

Perceived Performance by geography market
SPSTotal ESGEnvironmentalSocialGovernance
Developed Countries
Apple201254.446.256.658.1
201146.343.447.048.0
YOY Change8.12.89.610.1
 
Newly Developed Countries
Apple201258.257.357.959.7
201166.365.567.165.5
YOY Change-8.0-8.1-9.1-5.8
 

When looking at the details of Apple's ESG perception scores from 2011 to 2012, each individual audience we surveyed has quite a different view. Professional investor perceptions of Apple's E, S an G performance dropped on average by 2.8 points. On the other hand, perceptions among supply chain professionals and recent university graduates increased by 2.7 and 5.3 points, respectively.

Perceived Performance by audience segment
SPSTotal ESGEnvironmentalSocialGovernance
Investment Professionals
Apple201260.955.362.962.4
201163.762.664.263.9
YOY Change-2.8-7.3-1.3-1.5
 
Purchasing Professionals
Apple201253.348.954.056.2
201150.548.351.051.9
YOY Change2.70.63.04.3
 
Graduating Students
Apple201253.546.454.957.7
201148.245.349.249.0
YOY Change5.31.15.78.7
 

The supply chain scores are strikingly positive, given the negative press swirling around Apple's supplier relationship with Foxconn. Although Foxconn works for practically all of the giant consumer electronics companies, Apple seems to be bearing the brunt of the bad news associated with the poor working conditions in its facilities.

While Apple is famously opaque in its dealings with Wall Street, suppliers, consumers and even its own employees, since 2007 they have reported on their policies and procedures around all their supplier relationships (See http://www.apple.com/supplierresponsibility). In 2011 alone, they increased the number of audits conducted by over 80%.

While there is no doubt that the positive halo around the Apple brand has some influence on the perceptions of these audiences, it is hard to imagine that Apple's extreme Promoter position will last long term.

In our view, as more audiences come to understand Apple's real sustainability performance (which is below par relative to the 100 brands we analyzed) its perception scores will likely drop off. If Apple truly wants to chart a path to sustainability leadership, making improvements on the reality side is the most important first step.

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