Peloza, J., Loock, M., Cerruti, J., & Muyot, M. (2012). Sustainability: How Stakeholder
Perceptions Differ from Corporate Reality. California Management Review, 55(1), 74–
97
Introduction
A strong reputation one of the most valuable assets of a firm, and sustainability has become an
important component of corporate reputation. Many stakeholders report that sustainability is an
important factor in their decision-making processes. But, there is often a major gap between
stakeholder perceptions and firm performance.
One of the most important ways that sustainability can enhance firm financial performance is
through the positioning of the firm with salient stakeholders. In order for executives to capitalize on
the brand-building potential of sustainability, they must create both real and perceived sustainability
performance that is superior to competitors.
In this article, we examine stakeholders’ perceptions of the sustainability activities of firms, and
compare that perception with the reality of a firm’s investment in sustainability. Earlier research
found: (1) the perceptions of stakeholders can be highly divergent from the reality of a firm’s
investments; (2) stakeholders are unable to distinguish meaningful differences on sustainability
between the vast majority of firms.
“Sustainability reporting is the practice of measuring, disclosing, and being accountable for
organizational performance while working towards the goal of sustainable development.”
“Development that meets the needs of the present without compromising the ability of future
generations to meet their own needs.”
In order to form their perceptions about the sustainability activities of a company, stakeholders rely
on different means of communication the firm may use to publicize its efforts. This requires (1) a
strategy by the firm that employs a proper message, placed in the proper medium to the proper
audience; (2) the audience must be both
motivated and able to receive the message and
integrate the message into subsequent attitudes
and behaviors.
The research
Measures used to rate firms’ sustainability on
both objective and perceptual metrics:
• Perceptual measure of sustainability:
stakeholder survey section among
investors, purchasing/supply chain
managers and potential employees (800
participants each).
• Objective measure of sustainability: third
party rating, 175 individual metrics.
Sample of 100 well-known global firms (known in
different countries, and by their own brand name.
Sustainability Perception Score (SPS) +
Sustainability Reality Score (SRS) →
Perceptions Differ from Corporate Reality. California Management Review, 55(1), 74–
97
Introduction
A strong reputation one of the most valuable assets of a firm, and sustainability has become an
important component of corporate reputation. Many stakeholders report that sustainability is an
important factor in their decision-making processes. But, there is often a major gap between
stakeholder perceptions and firm performance.
One of the most important ways that sustainability can enhance firm financial performance is
through the positioning of the firm with salient stakeholders. In order for executives to capitalize on
the brand-building potential of sustainability, they must create both real and perceived sustainability
performance that is superior to competitors.
In this article, we examine stakeholders’ perceptions of the sustainability activities of firms, and
compare that perception with the reality of a firm’s investment in sustainability. Earlier research
found: (1) the perceptions of stakeholders can be highly divergent from the reality of a firm’s
investments; (2) stakeholders are unable to distinguish meaningful differences on sustainability
between the vast majority of firms.
“Sustainability reporting is the practice of measuring, disclosing, and being accountable for
organizational performance while working towards the goal of sustainable development.”
“Development that meets the needs of the present without compromising the ability of future
generations to meet their own needs.”
In order to form their perceptions about the sustainability activities of a company, stakeholders rely
on different means of communication the firm may use to publicize its efforts. This requires (1) a
strategy by the firm that employs a proper message, placed in the proper medium to the proper
audience; (2) the audience must be both
motivated and able to receive the message and
integrate the message into subsequent attitudes
and behaviors.
The research
Measures used to rate firms’ sustainability on
both objective and perceptual metrics:
• Perceptual measure of sustainability:
stakeholder survey section among
investors, purchasing/supply chain
managers and potential employees (800
participants each).
• Objective measure of sustainability: third
party rating, 175 individual metrics.
Sample of 100 well-known global firms (known in
different countries, and by their own brand name.
Sustainability Perception Score (SPS) +
Sustainability Reality Score (SRS) →
