Sustainable brands are more resilient, says Kantar

There has long been an almost myopic focus on the financial value of a brand. But there’s another area of value that doesn’t get the same kudos and that is a brand’s value to society and the environment, says Nandi Dlelapantsi, associate account director and BrandZ analyst in Kantar’s insights division.

“Sustainability is now a fundamental requirement for doing business and is also an enormous opportunity,” she says, adding that brands need to understand and act on the sustainability hygiene factors they must address to meet the obligations of their sector, as well as the sustainability leadership opportunities that exist for their specific brands.

South African consumers show the most concern for social issues such as poverty and hunger, good health and wellbeing, education and gender equality. Environmental issues like clean water and affordable energy are also top of mind.

“For the Kantar BrandZ Top 30 Most Valuable Brands, we use a combination of modelling and analysis to identify the specific contribution of sustainability perceptions to a brand’s equity, and to overall value. We then identify the importance of sustainability perceptions to demand power and pricing power for each category,” explains Dlelapantsi.

Over the past two years the sustainability contribution to brand equity for Mzansi brands has increased to 5.6% and to 7.7% for pricing power.

“While it is encouraging that the importance of sustainability in driving both these measures has increased over time, it also suggests that top performers have more work to do,” says Dlelapantsi.

Kantar also measured the extent to which sustainability is more or less associated with a brand, and identified the percentage of the brand’s value that can be attributed to sustainability perceptions.

In South Africa, sustainability perceptions contribute 3.2% to the value of the average brand in the Kantar BrandZ Top 30 Most Valuable Brands. Leading brands, however, derive as much as 7% of their value from sustainability.

“The good news is that over the past five years, consumer sustainability endorsements have risen by 40%, with social responsibility scoring the highest,” she reveals.

However, only 13% of brands in South Africa are known for their sustainability efforts, with the majority of brands achieving fair endorsements, indicating no real strengths, while a quarter don’t make any effort when it comes to sustainability, indicating that there is still a great deal of work to do in this area.

Brands lacking in sustainability perceptions, says Dlelapantsi, were less resilient to challenging economic conditions and lost 12% more brand value than the others.

So, which brands are doing well in this area and are using sustainability as a value driver?

Woolworths, the winner of the BrandZ 2023 sustainability award, continues to lead in this space, leveraging its sustainability perceptions to create a point of difference.

But the retailer is being challenged by FNB, while Sasol is making big strides to contend with Capitec and Checkers.

“What all these brands have in common is that they are seen to behave in a socially responsible way and treat employees well,” says Dlelapantsi.

Brands have to ask themselves what value they are delivering beyond the business, she says. “Sustainable business strategies aim to deliver value to a variety of stakeholders. This is increasingly part of our licence to operate as businesses and brands. Though some top 30 brands are already benefiting from this, they are in the minority.”

The opportunity gap, she says, is considerable and the value that is missing is huge.

“A robust sustainability plan is not only essential, it’s good business, and it’s also good for business.