Amazon has been named the world’s most valuable brand for the third consecutive year, becoming the first company to break through the £200 billion barrier in the 2020 Brand Finance Global 500 report, launched during the World Economic Forum Annual Meeting in Davos, Switzerland.

Hosted by Tata Consultancy Services (TCS), the launch event heard that companies with a strong authentic purpose outperform businesses that simply focus on profit, underlining the Davos event’s theme of building corporations that deliver for all stakeholders.

At the top of the table, Google moved up from third to second place, growing its brand value to nearly $160 billion, while Apple, once the world’s most valuable brand, slid from second to third place as its valuation dropped to $140.5 billion. 

The top five is completed by Microsoft, at number four this year despite a 2.1% fall in its valuation, and Samsung, which retains the number five slot with a 3.5% increase in value. Among the biggest risers were China’s ICBC bank, up from eight to six, and insurer Ping An, rising from 14 to nine as its value was boosted by close to 20% in one year.

David Haigh, CEO of Brand Finance.

Balancing purpose with profit

The report also measures brands using a combination of market capitalisation, profitability, turnover and reputational measures. Brand Finance CEO David Haigh said Amazon had got the balance right, partly thanks to diversification into areas like video streaming and cloud hosting.

While some companies succeed in aligning purpose and profit, Haigh said it could be tough to balance competing stakeholder demands. “If you have a purpose which dents your short-term profit, how do you survive the attacks of financiers who say, ‘Forget purpose, go for profit’?”

Investors must realize that a strong brand reputation attracts and retains customers, reduces regulatory burdens and attracts the best employees who want to work for a company that shares their values. 

The effect even reaches the boardroom. “There is a direct inverse relationship between the amount a CEO gets paid and the strength of the brand,” said Haigh. “On average, they get $4.5 million less as a result of working for a great brand.”

Brand strength is also reflected in profits. Companies with top-rated brands outperform others by almost 200% and enjoy borrowing costs 2.5% lower than the rest of the market. 

Amit Bajaj, CEO of TCS Europe, said that in a world being disrupted by technology and awash with over-communication, the importance of creating strong brands is greater than ever. “It is a topic that is very close to me, Tata Group and TCS,” he said.

“For us, purpose and profitability are two sides of the same coin. A good purpose drives our employees to create profitability and the profitability channels back into the realization of the purpose. “

Amit Bajaj, CEO of TCS Europe.

Tata Group’s founder, Jamsetji Tata, famously said that the community is not just another stakeholder, but the very reason for the company exist. Those values hold true today, said Bajaj. The group is majority owned by charities and philanthropic organizations.

Nicolas Georges Trad, co-founder of the Reputation Institute, whose data is used in the Brand Finance report, said it is vital that executives are accountable for delivering on a company’s purpose. Tying pay to purpose is essential, he said.

Involving all stakeholders

The need to build brand reputation is leading to rethinking the purpose of companies, according to Becky Frankiewicz, CEO, North America, Manpower Group, from a focus on financial returns to measuring a company’s positive contributions to wider society.

For Stella Medlicott, Chief Marketing Officer at Ericsson, a company’s purpose must be genuinely shared by everyone in the organization. And it should be relevant to what the company does rather than just following trends. “It has to be authentic otherwise it gets found out,” she said.

Malaysia-based global energy company Petronas has an interesting take on the issue. Adif Zulkifli, the company’s Executive Vice President & CEO, Upstream Business, said that moving to a sustainable future is a given in his company’s thinking.

Adif Zulkifli, Executive Vice President & CEO of Petronas, and Becky Frankiewicz, CEO of  Manpower Group, North America.

But so too is enriching the lives of all stakeholders by improving the communities they serve, providing opportunities for people to realize their full potential, and helping increase their standard of living. That means investing in projects that go well beyond supplying energy.

Haigh ended the session by reflecting on “a brand issue” affecting an organization, that, although sometimes referred to as “The Firm” is not strictly a commercial enterprise – the British Royal Family. 

Haigh revealed that Brand Finance conducts an annual assessment of the UK monarchy, which it currently values at $98 billion. That would place the British Crown at number five in the Brand Finance Global 500, displacing Samsung.

“It is very relevant to our discussion,” said Haigh, “because on the one hand, you’ve got the old guard who have a view about the way the monarchy should run and what it stand for and you have got Meghan Markle who has a different view about what the monarchy should be doing.

“To me that encapsulates the dilemma that many organizations have, where you have different constituencies and you have to bring them all along.”

You can keep up to date with our coverage of Davos through our live blog, here.