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Davos’s peak of distrust By Andrew Edgecliffe-Johnson Published: January 26 2009 18:43 | Last updated: January 26 2009 18:43
The 2,000-odd business luminaries, political leaders, campaigners and members of the media descending on the Swiss mountain resort of Davos this week are, according to the World Economic Forum’s motto, dedicated to improving the state of the world. This year, by common consent, they have a fuller and more urgent agenda than ever. Yet they have never been less trusted to provide the answer to the financial and social troubles they are supposed to be addressing. That is the stark conclusion of the 10th edition of the Edelman Trust Barometer, a survey of almost 4,500 “opinion leaders” across 20 countries that aims to measure the credibility of groups ranging from non-governmental organisations to stock market analysts. Each of these groups has taken its reputational hits in the recent past, notes Richard Edelman, chief executive of the communications consultancy that has commissioned the survey since the start of the decade. Enron, WorldCom and Parmalat tarnished business on both sides of the Atlantic; challenges to the reporting of Dan Rather at CBS and Jayson Blair at the New York Times eroded further the media’s reputation, while government’s standing was hit by the British government’s “dodgy dossier” about the case for war in Iraq and the Bush administration’s handling of Hurricane Katrina. According to Neal Flieger, Edelman’s general manager of public affairs who oversees the Trust Barometer, however: “In previous years, when one category went up, another went down. Here, everybody’s down.” This is most startlingly visible in the view of business expressed by the “informed publics” of well-educated, highly-paid and engaged 25-64 year olds polled for Edelman’s report, which will be presented tomorrow morning in Davos at a heavily oversubscribed breakfast session. Almost two-thirds – 62 per cent – said they trusted companies less this year than last. In the US and Japan, two of the world’s most important economies, more than 75 per cent had lost faith in business in the past 12 months. In the US, just 38 per cent now say they trust business – down 20 percentage points on the 2008 result to its lowest level since the poll began. “After six or seven years of hard work to rebuild trust after Enron, to have this reversal is almost like Sisyphus,” Mr Edelman says. Pushing the rock back up the hill will be hard, he adds: “It took a good two years for trust in business to recover after 2002-2003 but some things never recovered.” Drill down into the data and you
Opinion formers and trust
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find that, unsurprisingly, the erosion of trust in western business has been led by banks and automakers. In the US, just 36 per cent now say they trust the banking sector, down from 69 per cent a year earlier. In the three biggest western European economies, the figure dropped from 41 per cent to 27 per cent. China was the exception, with banks now trusted by 84 per cent of the “informed public” domestically, rather than 72 per cent a year ago. Other industries show noticeable regional differences. Automakers in the US have fallen steeply in the public’s estimation after a year that saw them flying (and then driving) to Washington to ask for a bail-out. In the UK, the loss of trust has been just a few percentage points. But for any global business so in need of urgent public support, these are alarming findings. “Right now, business is not trusted to do the right thing,” Mr Flieger warns. Most of those polled called for business to work in partnership with government to solve the economic crisis and other issues ranging from climate change to access to affordable healthcare. Here, Mr Flieger sees a glimmer of hope. “The road to rebuilding trust is recognising the responsibility to be an actor on issues facing the planet,” he says. Mr Edelman predicts that this “mutual social responsibility”, shared sacrifice by chief executives, and “private sector diplomacy” will be key themes in Davos: “Companies that walk away from big social issues or say they can’t afford to be sustainable are making a big mistake,” he argues. As members of business, government and non-governmental organisations come face to face this week, Mr Flieger says the survey carries a particular warning for western companies. The few countries where the poll shows trust in business or other institutions increasing are all in emerging economies such as Brazil, Russia, Indonesia, China and Mexico. “Think of the multinational forums coming up that will reshape the world – Davos, Doha, the G20, the UN food summit, Copenhagen. The presumptive western orthodoxy going into these events has been that those of us that traditionally set the agenda in the world will continue to set the agenda in the world,” he says. Now, however, “the west has no money, a tradition of business and government being in opposition, and a situation where both those sides lack trust. The eastern economies, broadly, have more money; they have a tradition of government and business being more symbiotically linked; and both those groups are more trusted.”
busters The Trust Barometer shows strong connections between trust in a brand and its sales. Where once a few activists might boycott a mistrusted company’s products, 77 per cent now say they have criticised the products or services of a business they did not trust to friends or colleagues. Once, companies polished their reputation by talking to regulators, investors and the mainstream media. “Today, you’d better talk to employees, NGOs and your most activist consumers. There’s a new set of influencers,” says Richard Edelman, chief executive of Edelman, the communications consultancy. With no single source of information carrying the weight it once did, 60 per cent of those polled said they now needed to hear information three to five times before they believed it. The most authoritative voices on business are now academics, trusted by 61 per cent of the Americans polled, compared with just 16 per cent who would take the word of a company’s CEO. But people also lend great weight to anecdotal information from a company’s employees and their circle of friends. Staff bloggers are three times more credible than chief executive bloggers. Similar arguments have been made by proponents of advertising on social networks such as MySpace and Facebook, but these were trusted sources for only 8 per cent, down from 14 per cent a year earlier. “Companies are going to have to find ways around this. They will have to be much more open and diffuse,” Mr Edelman says. “In 2003-2005, CEOs went underground. That’s exactly the wrong thing to do now. If you hide, you’re never going to make it back.”
Western business can ill-afford to be so little trusted at precisely the time when it matters most that its voice be heard. Restoring the trust it has lost will not be easy or quick, Mr Edelman says: “It’s like a male/female relationship where one side has done something a little off. It feels like someone’s had an affair. It’s always on your mind.” Copyright The Financial Times Limited 2009
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