Holmes Report 15 Oct 2011 // 11:00PM GMT
For a second year, the Dutch industry leader Koninklijke Philips Electronics has topped a European survey of corporate purpose and performance impact based on an analysis of reputation and sustainability rankings.
The research, conducted by Burson-Marsteller and the Center for Corporate Sustainability at IMD, scores and ranks Europe’s top 250 companies according to the impact of their corporate purpose and correlates that ranking to their financial performance. A study in 2010 revealed that companies which communicated their corporate purpose effectively were more likely to have better financial performance.
Philips was joined by the German companies Adidas and Henkel as well as the Norwegian energy giant Statoil at the top of the company. All four companies scored maximum value in the Purpose Impact Index correlated with strong financial performances.
ABB, Glaxosmithkline, and Unilever were among the close runners-up, scoring “very high” on corporate purpose, correlating with very strong financial performance. The best performers in each industry sector included BMW (automotive),Swiss RE (insurance), Deutsche Post (industrial commercial services), Stora Enso (materials), Nokia (information technology) Vodafone Group (telecommunications) and E.On (utilities).
Industries that scored above average included information technology, healthcare and telecommunications, while the utilities and financial sectors were ranked as below average.
“This second round of research confirms that a clear and well communicated corporate purpose is associated with strong financial performance,” says Jeremy Galbraith, CEO of Burson-Marsteller Europe, Middle East and Africa. “The study also shows that companies are increasingly aware of this correlation, and nearly 75 percent of large companies actively communicate their corporate purpose, which is up from just over 65 percent last year. We can conclude that communicating about their company’s corporate purpose is one of managers’ key strategic tools to build trust and reputation with their stakeholders.”
IMD Professor of Reputation Rosa Chun adds: “If stakeholders perceive that communication around corporate purpose is no more than window-dressing, they are likely to react cynically, with obvious knock-on effects on corporate reputation. ‘Walking the talk and talking the walk’ is the new corporate mantra that can deliver value to companies.”