An Examination of Corporate Environmental Behavior and Brand Name Value

No.119
November 2001
Senior Associate Hiroshi Hamasaki

The Issues and the Background

With the developments in environmental legislation over the past few years, general interest toward environmental issues has grown and, with the proliferation of green procurements, corporate responses to environmental issues have diversified. Yet, the environmental accounts of each company shows that the outlay required by their environmental efforts have already surpassed the benefits that could render. Further environmental efforts would not only increase the financial burden of companies, but would contribute to the ultimate paralysis of environmental efforts altogether. On the other hand, groups such as the K?chi Prefecture Yusuhara-ch? Forestry Union are attempting to use their environmental efforts to give brand name value to their products. By receiving forestry certificates in exchange for their environmentally friendly forest management practices, they distinguish their timber supply from that of foreign and domestic companies. Not only are they raising the brand name value of their product through their environmental efforts, but it seems that they are also encouraging the industry wide capitalization of environmental behavior.

In the following report, I would first like to examine the phenomenon of environmental brand name value, i.e. how do consumers appraise companies that behave environmentally and does it become a factor for selection at the time of purchase? Based on these findings, I would then like to make some recommendations as to how companies can heighten their environmental brand name value.

Research Content

1. The Environmental Efforts of Corporations and the Environmental Image of ConsumersAre the environmental actions of corporations being accurately conveyed to the general consumer? I would like to consider the relationship between corporate environmental actions and corporate environmental image.
2. The degree of influence that a company's environmental behavior has upon consumers at the time of purchasing household electronics (e.g. air conditioners and refrigerators) and food products (e.g. milk).
   After distinguishing the factors that consumers consider at the time of purchasing household electronics and food products, I would like to examine the place of the producer's environmental behavior amongst these factors.
3. The measures taken to transform a company's environmental actions into brand name value.

I would like to make some proposals as to the efforts companies should make and the policies they should adopt in order to transform their environmental actions into brand name value.

Conclusion and Recommendations

1.Conclusion

It is difficult to distinguish a correlation between the level of a company's environmental activity and the strength of its environmental image. Companies like Toyota, however, who sell environmentally friendly products and promote the importance of environmental preservation in their commercials, have a strong environmental image.

Consumers do not seriously consider the environmental behavior of a company when purchasing electronic products except when they directly benefit from the company's environmentally friendly product. This is because 1) many consumer still have a low environmental consciousness, 2) the environmental behavior of companies is not adequately conveyed to consumers, 3) it is difficult for consumers to compare the environmental behavior of different companies (i.e. consumers do not have any numerical information at the time of purchase), 4) it is difficult to evaluate the environmental efforts of companies through the use of their products, 5) all companies are taking the same type of environmental actions and publicizing the same type of environmental information. However, many consumers seriously consider environmental factors when they stand to directly benefit from the environmentally friendly product that the company provides (e.g. energy saving products). This is because 1) energy saving products reduce consumer's energy bill and 2) consumers can easily obtain the information needed to compare the energy saving capacity of the products (the annual savings in electricity that each company's product enables is displayed either at the store or on the flyer).

2.Recommendation

a. Recommendation to Companies

Instead of broadly publicizing small amounts of information, companies must begin to provide consumers of products and services with more detailed information: information on the product ingredients and their influence on the environment, information comparing the product to the average of other products. As many companies now have environmental accounts and reports, have adopted ISO14001, and now publicize their environmental efforts through websites, reports, and commercials, there is currently not enough of the differentiation necessary to generate brand name value. Companies must implement original environmental initiatives, those that have not been undertaken by other companies, and must provide more information about their environmental activities, particularly about their participation in the consumer environmental efforts such as recycling and garbage reduction).

b. Recommendation to the Government

The government must work to heighten people's consciousness toward the environment and toward corporate environmental activities by enhancing environmental education.

More Informations

• Japanese
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