Corporate prowess in environmental, social and governance (ESG) has little or no merit as an indicator of superior economic returns. The evidence is considerable, pursuit of performance creates cost to the firm and is a constraint to investment opportunity. ESG measurement is critical but it must be designed to be and rooted in the economic benefit delivered. Superficial research that fails to answer the question ‘but financially speaking, so what?’ will only speak to the converted and do little to promote the cause. ESG measurement systems need to step up. Inconsistencies between the current crop of corporate indicators is obfuscating what is an already confusing picture. If ESG is to become embedded in corporate behaviour it needs to be managed with the same discipline and professionalism as deployed in other critical functions. Well-meaning advocates making fundamentally empty claims will not provide the heft that is required.

The fact that corporate reputations deliver tangible shareholder value has been recognised by managers for some time. More recently, techniques have emerged that allow them to measure just how much value reputation delivers and identify the driving factors in order to structure communications and corporate messaging accordingly. While these techniques are having a marked affect on how companies are managing their reputation assets their use also has implications for investors. This paper uses reputation data to analyse the share price performance of companies identified as over- or under-valued. Evidence is found that where reputations are such that they suggest the companies are under-valued, that over time their market capitalizations grow at a greater rate than those whose reputations suggest over-valuation. This implies company reputation can be a powerful leading edge indicator to estimate investor returns and thus contribute to fund management.

Corporate reputations rank amongst companies’ most valuable assets. They are delivering substantial proportions of their market capitalisations and are a major source of value generation. Their significance is being felt in a wide variety of business sectors including real estate and in particular Real Estate Investment Trusts (REITs) where, as this paper demonstrates, they have become critical drivers of shareholder value as investors increasingly find the surveyor estimates of underlying asset values wanting. This is having significant implications on how, for example, REITs need to manage their corporate reputations and deploy the likes of reputation value analysis to ensure that the messaging they’re delivering is both securing and growing corporate value.

Corporate reputations are one of the best known but least understood company assets. Few investment analysts would argue that they have no value but at the same time would struggle to put figures on how much. This paper dispels the myth that intangible means immeasurable. It provides an objective analysis of the scale of the shareholder value tied up in the reputations of many of the largest US and UK public companies. Moreover, it argues that critical understanding of the sources and drivers of reputation value can help corporate leaders to better manage their assets and investors to make more informed decisions.