Seventy-eight percent of U.S. consumers say living a sustainable lifestyle is important to them, according to a joint study from McKinsey and NielsenIQ. Marketers know this – but for CFOs, it’s only half the story. They’re asking: does that concern actually translate into brand value… and into financial returns? This is the gap that CMOs must bridge. To make the case convincingly, CMOs must translate sustainability into financial brand value.
It’s a challenge that is playing out across industries. Sustainability is no longer optional, it’s a strategic imperative. It has moved into the mainstream, but proving its return on investment remains a challenge, particularly for those responsible for building and communicating brand equity. Marketing, as a business function, is under pressure to support this shift by developing, positioning, and promoting sustainable offers. But for marketers, the challenge is showing how these investments affect brand value.
This is where brand valuation comes in. CMOs must start thinking like CFOs and link brand investments to tangible business results.
CFOs view every asset – tangible or intangible – through a simple lens: risk and return. The same approach can be used to evaluate the impact of sustainability on brand value. For marketers, this means reevaluating the ways of measuring and communicating the effects of sustainability initiatives. Does “going green” increase customer loyalty, enhance trust in the brand, allow for premium pricing? That is the return side. Does it shield the company from reputational or regulatory fallout? That is the risk side.
But the relationship between sustainability and brand value isn’t linear nor guaranteed. While some companies see clear benefits, others experience no impact – or even experience a backlash. So, what’s behind this inconsistency? With my coauthor, Carmen Abril of Complutense University of Madrid, we have identified four key reasons this gap persists.
Let’s start with timing. Sustainability efforts often require significant upfront investment, which can hurt short-term profits. But over time, as consumer trust builds and loyalty grows, this is when the payoff begins to show. In fact, research suggests a U-shaped curve: brand value may initially decline, then rebound and grow – provided, of course, that the company sticks to its promise. Patience and consistency are essential here. From a CFO’s perspective, the initial dip in brand value is a calculated short-term cost that positions the company for stronger, long-term returns.
Strategic storytelling can turn sustainability into a competitive asset.
Category also matters. Consumers respond differently to the idea of sustainability depending on the product. In utilitarian categories (think cleaning products or basic appliances), people may assume that eco-friendly options are lower in quality and effectiveness. This is known as the “sustainability liability.” On the other hand, for lifestyle-driven or luxury products (fashion, high-end electronics, vehicles), sustainability is often a differentiator. Brands like Ecoalf, Patagonia, and even Tesla have built their reputation on environmental innovation. In those sectors, green credentials can drive preference and premium pricing. The mechanism is evident, tracked through ESG indices such as MSCI or Sustainalytics, which influence consumer perceptions of a brand’s environmental and social commitments. When clearly communicated and for non-utilitarian categories, these perceptions translate into increased trust and consideration, which are key drivers of brand value. Brand valuation frameworks quantify this link by connecting ESG performance and consumer sentiment to financial outcomes such as pricing power, customer loyalty, and reduced risk. For instance, Tesla – known as a sustainability pioneer – translated its environmental leadership into positive consumer perceptions. According to Brand Finance’s 2025 Sustainability Perceptions Index, 23.4% of its brand value is driven by sustainability, despite recent declines in those perceptions.
Then there is communication. Even the best sustainability initiatives won’t matter, brand-wise, if customers don’t know about them – or worse, they don’t believe them. Messaging must align with the brand’s identity and values and resonate with the audience. If the message doesn’t reach consumers effectively or feels insincere, it will undermine the very value the company is trying to build. Strategic storytelling, however, can turn sustainability into a competitive asset.
Finally, measurement is a major challenge. Most researchers have used ESG metrics, which focus on tracking corporate sustainability efforts. This approach – the Corporate Pathway – emphasizes how sustainability helps reduce brand risk. For example, strong ESG policies can make a company more attractive to investors, improve analyst ratings, and reduce reputational exposure.
But brand value is also shaped by perception. This is what we call the Consumer Pathway. When customers view a brand as genuinely sustainable, it can trigger emotional responses and these can, in turn, influence purchase decisions, loyalty, and ultimately the financial performance of the company. However, this pathway only works if the sustainability story is communicated well, if it is visible, credible, and compelling.
The most effective brands measure both paths. They track ESG and consumer perception. This dual approach helps marketers adjust strategies, identify gaps, and make the business case internally. It also helps prevent greenwashing by aligning internal action with external messaging. According to Brand Finance’s Index, Tesla’s Sustainability Perceptions Value (SPV) fell from US $17.8 billion in 2023 to US $10.4 billion in 2025 – a loss of more than US $7.3 billion in sustainability-linked brand value. The decline reflects rising scrutiny over Tesla’s governance and labor practices, as well as mounting political backlash. The data underscores how a disconnect between public perception and corporate behavior can erode brand value – and why closing that gap is essential.
So, what does this look like in practice? It means applying a CFO’s logic – risk and return – to every decision about how sustainable brands are developed, positioned, and measured. Marketers should tailor their sustainability messaging and communications approach to their specific product category. If you’re selling cleaning products, emphasize quality and effectiveness alongside sustainability. If you are in luxury, highlight emotional and ethical dimensions that connect with the buyer’s values. It’s important also to pay attention to geography. In regions with lower expectations – emerging markets, for example – there might be greater benefits from adopting green practices.
Finally, marketers must think long-term when it comes to sustainability and branding. It might not pay off in the next quarter’s profits, but it can strengthen long-term brand stability by building trust and reducing exposure to risk.
Sustainability is not simply about “doing good” anymore. It’s about being financially smart. But to prove its value, marketers must go beyond vague promises and glossy campaigns. They must speak the language of finance: risk, return, evidence. That means thinking like a CFO and using better tools to show how sustainable choices shape both perception and performance.
If we want to move sustainability from the sidelines to the center of business strategy, we need to measure what matters. Only then can we truly say that doing good is also good business.
© IE Insights.
