New report from Echo Research shows the reputation value of the UK’s leading companies reaching £719bn, up nearly 4% from 2023, while investors now rate ESG initiatives as a negative contributor to value

According to research published today (21 October 2024), reputation value now accounts for 30% of the value of FTSE350 listed companies. The research, compiled by UK-based market research firm Echo Research, highlights the increased importance of reputation, with 93% of UK companies seeing it play a positive impact on their capitalisation.

Echo Research identified nine factors that it believes shapes corporate reputation and its value contribution. Of those nine, long-term value was held to be the strongest, with a value set at £135bn. The quality of management came fourth, contributing £100bn - slightly ahead of the employer brand which was valued at £92bn.

According to Echo Research CEO Sandra McCloud, the report highlights the importance of corporate reputation. “Against the backdrop of the current political and economic environment, reputation has emerged as a vital asset. Companies that demonstrate strong leadership, strategic foresight, and resilience are best positioned to maintain investor confidence.  Investors are increasingly prioritising companies with strong leadership capable of navigating challenges and seizing opportunities.”

Surprisingly, environmental, social and governance (ESG) factors were found to have a negative impact, with Echo Research blaming the high investment in ESG and the subsequent effect on short-term results for an estimated £8bn reduction in corporate value.  As McCloud said, “For the first time, ESG factors are deemed net ‘value destroyers’ for many companies as investors weigh up the cost of compliance and risk assessment.”