TENUOUS TRUST

Public trust in corporations is rising again, after having fallen significantly during the recession, but new challenges continue to emerge and research suggests that the rise in trust is tenuous. In this environment, trust has become a key element of competitiveness and sustainability for companies.

In many ways 2009 was a ‘perfect storm’ for public trust in corporations, as the subprime mortgage crisis rippled across the global economy even while senior executives at some of the companies central to the crisis continued to receive exorbitant bonuses. The Edelman Trust Barometer showed that nearly two thirds of their study population (25-to-64-year-olds in 20 countries) trusted corporations less in 2009 than they did the previous year. At the beginning of 2009, only 36 per cent of the U.S. public trusted business to “do what is right”.

In 2010 the general level of trust has risen, but the BP oil disaster is likely to push these levels down again. Furthermore, the Edelman Barometer warns that, even though trust in business is up, this rise is tenuous. Nearly 70 per cent of the informed public expect that business and financial companies will revert to “business as usual” after the recession.

The 2010 Edelman Barometer also showed that, for the first time, trust and transparency are as important to corporate reputation as the quality of products and services. Furthermore, the extent to which corporations are seen to be advancing social good has become an important factor in earning trust. Taken together, these two findings suggest that to advance reputation, companies need to be everywhere, engaging everyone. The Edelman Barometer encourages companies to build a ‘mosaic of trust’ by cultivating a wide circle of expert spokespeople, communicating through a variety of channels, and partnering with NGOs to advance the common good.

It is clear that corporations face a daunting task in restoring public trust, but are CEOs placing enough importance on this issue? The 2010 PricewaterhouseCoopers Global CEO Survey showed that only 8% of CEOs believed their industries experienced a ‘significant fall’ in trust. Among banking and capital markets CEOs, this figure rose to over one-third, yet the fact that CEOs generally do not perceive a loss of trust may mean that this issue will

not be prioritized in many companies where an urgent focus on corporate reputation is required. As Aron Cramer, CEO of BSR, points out, public trust “is about more than winning a popularity contest. Without the public’s trust, business faces cynical consumers, unhappy employees, and public officials that tap into this mood with punitive legislation: hardly the conditions most companies want and need.”

President and CEO of the Edelman Barometer, Richard Edelman, concludes the 2010 trust barometer by saying that “trust has emerged as a new line of business—one to be developed and delivered. Companies that embrace the new reality, where the interests of all stakeholders must be consid¬ered equally, will see their credibility rise accordingly. Now is the time for companies and CEOs to deliver performance, communicate frequently and honestly, and consider the role of business in society. Now is the time for business to prove its commitment to profit and purpose.”