The Impact of Sustainability on Brand Value

Recently, there has been a lot of buzz about eco-friendly financial investments as investors have become more concerned with environmental, social, and governance (ESG) issues.

In fact, according to Morning Star, 351 US investment firms with a combined $161 billion in assets under management considered ESG factors before investing in a company in 2018.

But why is this happening?

Well, there's only one possible answer.

Many business owners have discovered that positive ESG indicators can improve a company's reputation among stakeholders and customer engagement, resulting in higher brand value.

The question now is, "How does sustainability increase the brand value of your business, and what can you do to make your business more sustainable?"

Our digital marketing agency's experts in Nashville will answer these and other questions below. First, though, let's define brand value.

What Is Brand Value?

Your brand's monetary worth is its "brand value," which is determined by how much money you could make by selling your brand.

In the event of a merger or acquisition, the value of your brand would be the amount of money that another company would be willing to pay for the right to use your company's name, logo, and brand identity in marketing its own goods and services. This represents the market value of a brand.

Brand value can also be analyzed by its replacement cost (cost-based brand value). Creating a new brand that performs as well as your current one is the cost of your brand's value.

This sum might incorporate a variety of expenses, such as those associated with hiring a design firm, developing a marketing and social media strategy, and launching an advertising, PR, or sponsorship campaign.

How Does Sustainability Increase Brand Value?

Brands add value to a business by guaranteeing demand and, thus, revenue in the future. The question then becomes how sustainable investment can affect those long-term profits and reputation.

As previously stated, a company's value is the present value of its future earnings. The size of the profits and the risk involved determines it. As a result, value is strongly related to sustainability:

The greater a company's ability to demonstrate to financial markets and other audiences that it is a sustainable business, the lower the risk associated with that company (and the lower the rate used to discount future earnings).

Similarly, brand value is the present value of a specific brand's future earnings. Brand risk is a function of company risk that has been adjusted for the strength of particular brands. According to the experts at our digital marketing agency in Nashville, several factors influence this, including the following:

• Amount and Quality of Investments Received
• Brand Image (The Perceived Personality and Reputation of the Brand)
• Customer Franchise (Relationship With Customers)

What Are the Different Types of Sustainable Brands?

Knowing where your company falls on a spectrum measuring its commitment to sustainability is essential. From this point of view, you can plot your course toward achieving sustainability's many rewards.

In their new book, Rethinking Sustainability: Brand Risks and Opportunities, Verdantix identifies five compelling archetypes of company sustainability messaging.

• Purists like Patagonia have linked their company's image with environmental responsibility. ‍
• Explorers like IBM and GE take risks by incorporating sustainability into their brands, integrating sustainability communications into their operations, and reaching a large audience.
• Most businesses, including McDonald's and Samsung, fall into the category of "advocates," which are characterized by their active sustainability communications that stand apart from their standard corporate communication. ‍
• Reactionists are companies that take a more passive approach to sustainability and only mention it in response to crises. ‍
• Nothingists, as the name implies, communicate nothing about sustainability.

Which end of the spectrum does your company sit on?

What Can You Do To Make Your Business Sustainable?

Once you know where your company stands regarding sustainability, you can start making the necessary changes to move it closer to the green end of the spectrum.

With this in mind, businesses must approach sustainability with intention rather than simply as a marketing tool. Too many brands try to "fit in" with shifting cultural norms by drastically altering their identity.

However, when consumers see inconsistencies between how a company presents itself and what it actually does, they often form negative perceptions of that company's brand.

Our Nashville digital marketing agency experts recommend three simple steps to make your company more environmentally friendly:

1. Use Sustainable Materials in Your Products

An environmentally conscious company must be built from the ground up. The first step in greening your business is asking the following raw material questions:

• Are they obtained sustainably?
• Are they ethically produced?
• Are they made from materials that are recyclable, renewable, or biodegradable?
• Do you practice green procurement?

Partnering with local suppliers can also benefit your company's brand and help you support your community.

2. Go Green With Your Packaging and Shipping

The Environmental Protection Agency recently conducted a study that found that containers and packaging make up more than 23 percent of trash in American landfills. This highlights the importance of adopting environmentally friendly packaging to mitigate the adverse effects.

One method is to replace plastic with biodegradable alternatives such as corn starch, mycelium, wood pulp, and seaweed. If you can't avoid using polymers, use only one type of polymer in your packaging if possible.

However, eco-friendly packaging is only the first step toward ensuring your company's sustainability. Using eco-friendly shipping methods can help you reduce your carbon footprint even further.

3. Involve Your Employees

Your whole team needs to work together to keep your small business sustainable. When the culture of your company is built around taking care of the environment, it's easy to reach your goals.

Giving your employees incentives and rewards for green habits and letting them know you appreciate their work is one way to get them involved.

Ask them how they think positive changes can be made at work and in the community. Simple steps include riding a bike to work, having "no trash" days, and "bring your own lunch" days will get them interested and get them going. 

Sustainability Is a Selling Point for Any Small Business

After all that work, why keep it to yourself? Share the news with everyone that your company is taking environmentally responsible steps.

Your brand's image and social license to operate can benefit from a closer examination of how it can represent sustainable values. As a result, you must make an active effort to consider sustainability.

The experts at our Nashville digital marketing agency can help you spread the word about your company's green initiatives if you need help knowing where to begin.

Contact Digital Resource to learn more about how our marketing services can help your company grow.