SDGs Management:
What are the benefits of SDGs management?
Correlation with Investor’s Ratings and Brand Strength

• Sustainable

Nikkei Research has been conducting various surveys to evaluate the efforts related to SDGs of companies and local governments. Such as the Nikkei SDGs Management Survey and the nationwide Cities & Counties SDGs Advancement Survey, to name a few. We will introduce what outcomes can be obtained by SDGs management and advanced case studies toward combating climate change and achieving carbon-zero, which has become an urgent issue nowadays.

In this article, we will focus on the synergy of SDGs management.

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SDGs Management Project Team, Keiko Samata

  "Other than solving social issues, what benefits does SDGs management bring to the company?” That is one of the most frequent questions thrown by the executives to people in charge of promoting sustainability within the company internally, where, not surprisingly, it is hard for them to give out clear answers. So we tried to find out the answer to this question exploring the data from the Nikkei SDGs Management Survey and other syndicated surveys conducted by Nikkei Research in Japan.

Benefit 1: Investors’ eye

When Japanese companies were asked how they felt about the effects of SDGs management, 28.6% of the total 731 companies said that they felt they were “being evaluated at this moment”, in the SDGs Management Survey. When combined with the responses of "lead to our evaluation in 2-3 years" and "lead to our evaluation in 5 years or later", the share rises to 62.1%.
By the SDGs Management Survey’s Company Ratings (*1), the higher the company's ranking, the more companies felt they were being evaluated by investors. 74.4% of the leading companies with a rating of 4.5 or higher answered that they feel that they are being evaluated at this moment.

Figure 1: Percentage of companies who feel their SDGs efforts
are being evaluated by investors (N=731)

Benefit 2: Brand strength

In SDGs management, not only with investors but also empathizing and co-creating with all the stakeholders is the key to sustainable growth. According to our survey, the top answer on the effect of SDGs activities in the company they work for, was "improve corporate image and brand strength" at 32.9%. Followed by “improve business performance" (20.5%), "empower communication among employees" (18.5%). The lowest was "strengthen recruiting" (8.2%).

Figure 2: Effects of the company's SDGs contribution efforts (N=8,506)

The relationship between SDGs management and brand power is clearly shown by the Nikkei Research's Brand Perception Index (Perception Quotient) (*2), which evaluates the overall brand equity of a company. In short, companies with advanced SDG management have higher brand equity. The index is based on five evaluation items such as "willingness to recommend" and "premium", and its average is 500. Companies rated "4" in the SDGs Management Survey’s Ratings had a Brand Perception Index value of 524 and 559 for "above 4.5" rated companies. It indicates that companies that are shifting and accelerating greatly in SDGs management to achieve a better future, targeting such as zero carbon emissions in the coming years, are also receiving a high performance in their brand equity.

Table 1. Value of Brand Perception Index by SDGs Management Survey’s Ratings

Communicating the contribution by the core business is missing for recruitment

It is being said that SDGs are becoming a rising factor for students to choose companies along with salary and benefits, but in the results of our survey, SDGs were not seen as a very effective way in recruitment. The reason for this became clear to me when Ms. Moeko Onuki, a senior student at Keio University, told me about her impressions after completing her job-hunting activities.
“All I saw in company’s IR and introductory sessions through my searching was just basic stuffs, such as the presence of female directors and measures to reduce CO₂ emissions.”
“If I could hear more about innovative business from a backcasting perspective, I would have felt excited to participate..."
To attract students of SDGs-native generation, who are carefully watching the future potential of companies from the sustainability view point, companies would really need to appeal to them how they are taking this matter seriously.

(*1) Ratings of the SDGs Management Survey

(*2) Brand Perception Index (Perception Quotient)

Using the framework of Nikkei Research's Brand Perception Index (Perception Quotient), which evaluates a company's brand equity, a survey on 731 companies (participant companies of the SDGs Management Survey) was conducted. A total of responses from 24,495 consumers and 24,034 businesspeople were collected, averaging 600 responses per targeted company. The PQ scores were calculated based on five evaluation items -- consumers: necessity, uniqueness, empathy, premium, and willingness to recommend / businesspeople: necessity, uniqueness, attractiveness, premium, and willingness to recommend.

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