Ethics a Top 10 Driver of Corporate Reputation and Market Value

Yesterday, Weber Shandwick released an interesting study on the drivers of corporate reputation – The State of Corporate Reputation in 2020: Everything Matters Now.

The TL;DR version of the report finds that reputation drives on average 63 percent of a company’s market value, but there is no one factor that primarily drives reputation so many things matter. The report identified 21 factors that more than 50 percent of respondents said significantly contributed to reputation.

One thing I was glad to see is that ethics and values was identified as an essential contributor by 58 percent of respondents. This puts ethics and values clearly in the top 10 drivers of corporate reputation.  In a way it’s not surprising, but it was interesting to see it ranked above corporate culture, purpose, diversity and inclusion, community relations, environmental responsibility and philanthropy. (Although the study doesn’t give a margin off error, I would bet some of those are within the margin)

Additionally, 79 percent of CEOs indicated it was important to communicate their company’s values. (Hopefully the other 21 percent will wake up soon).

The other key takeaway of the study is there is an important segment of executives that attributes at least 76 percent of their market value to company reputation. When you look in detail at that segment, 10 percent more of the senior executives (68 percent) rank ethics as a key driver of corporate reputation.

Unfortunately (for ethics geeks) the report does not break out the importance of ethics and values by industry or region. But it goes to show that in 2020 businesses that stand for something and keep true to their values are stronger and can weather the storm.

I encourage those that are interested to check out the full study here.

 

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