It is no news to PR specialists that a brand’s reputation is valuable, but exactly how valuable is it? According to a recent study by intangible asset specialist Reputation Dividend, corporate reputation accounts for £790bn of shareholder value (£170bn more than last year) and remains over a third of the total market capitalisation in the FTSE 350.

Three key finds from the report:

• Reputations contribute £790bn of shareholder value – over a third of the total market capitalisation in the FTSE 350.
• Consumer-goods company Unilever has the most economically impactful reputation, with important gains seen at oil company Shell and consumer-goods company Reckitt Benckiser, in second and third places. Pharmaceutical firm Shire joins the top ten for the first time.
• PROs are wise to focus on corporate responsibility of brands, as the economic impact of reputational qualities related to this grew more than for any of the other factors tracked, with positive perceptions now boosting investor confidence worth £53bn of shareholder value across the index.

The Most Economically Impactful Reputations in the UK 2016 

©   Reputation Dividend    

The study shows how reputation value is created when recognised strengths and qualities of individual companies coincide with investor interest. Sandra Macleod, director of Reputation Dividend, says the single most valuable component of corporate reputations this year is the impression of “financial soundness”. Macleod adds: “The second and third most significant factors are the ability to ‘attract, develop and retain talent’ and ‘quality of leadership’. The economic impact of ‘corporate responsibility’ grew more than any of the other headline factors tracked.”

Reputation Dividend founder Simon Cole adds how good brand reputations are helping to strengthen the stock exchange: “After misplaced optimism in the markets last year, all signs point to the fact that reputation played a substantial part in softening the impact of uncertainty, mitigating downward pressure on share prices and stemming otherwise larger falls in the indices in the latter half of the year. Indeed, without the up-ticks in reputation impact, we calculate that the lead index could have ended the year as much as 10% lower and the secondary index down by nearly 7%.” 

“Looking ahead,” concludes Macleod, “with volatility set to continue, not least because of the forthcoming EU referendum, the winners over the next twelve12 months will be those companies that focus on the operational and messaging priorities which support continued confidence through turbulent times. Reputation may be intangible but it has a very tangible value.”

Background

Reputation Dividend is a recognised index of the financial value of corporate reputation as measured as a percentage of market capitalisation. This is the ninth Annual Report, covering some 160 of the largest companies in the UK. The 2016 UK study was run in parallel with its sister US study, and is based on data reported from late 2015 through to the start of 2016. The full study is freely available at http://reputationdividend.com/recent-studies/