Europe | Trust
WORKING TOGETHER To rebuild trust, there needs to be a coordinated effort, involving all elements of business
Why it’s time to start the trust fightback “Once bitten by a snake,” the Dalai Lama says, “you feel suspicious when you see a piece of rope.” To put it in a less mystical way: trust is easily lost, and very hard to rebuild. Arguably, we are currently experiencing a global breakdown in trust. A comprehensive annual survey, the 2017 Edelman Trust Barometer, displays this dearth of faith in business, politics and the media.1 The British public’s trust in the government is at just 26 per cent; for business the figure is 33 per cent, while the media only manages 24 per cent. The historic low levels of respect for traditional media sources have given rise to a widespread belief that much of the news is fake, a belief that has been exploited and exacerbated by populist politicians in many countries. This is a striking example of what can happen when the public stops believing in the institutions around them. UK chief executives are experiencing a reputational crisis, too, with just 28 per cent of Britons saying they trust business leaders 54 Ethical Boardroom | Summer 2017
Business needs to rebuild public confidence by demonstrating it deserves it James Jarvis
Corporate Governance Analyst at the Institute of Directors – 12 per cent lower than during the same period last year, and lower compared than the 37 per cent across the rest of the world. This decline in trust comes in part from high-profile instances of corporate chicanery, such as the Volkswagen emissions scandal, and in part the slow recovery from the 2008 recession, which has seen poor growth for many people’s wages. Issues, such as public distaste for high executive pay, tax avoidance, the banking crisis and corporate governance failures, including Sports Direct and BHS, all feed into a general mistrust in business. This has a detrimental effect on the majority of businesses that operate in an ethical manner with mind to the society and community they inhabit. Just because an
individual business may behave well, it doesn’t mean they can ignore the wider trend.
Lack of faith
Weak trust matters for business because it can demotivate workforces, anger customers and, in some cases, prompt government intervention. Taken together with the lack of faith in government, it also suggests dissatisfaction with the way the economy is working for sections of society – a central part of Jeremy Corbyn’s pitch to voters at the election. Just as business is now truly global, the response to the trust challenge also needs to be viewed as an international project. The Institute of Directors (IoD) Director General, Stephen Martin, recently chaired a panel on rebuilding trust at the recent European Conference on Corporate Governance in Malta.2 Panelists and audience alike shared in the concern that recent patterns of mistrust throw up and there was a general consensus that excessive executive pay and public perception of the issue were among the primary causes. As to the steps business could take to address this issue, there was relative alignment between the conclusions of the panel and those found in Edelman’s research. www.ethicalboardroom.com
