As the global economy recovers, the level of public trust in business is also increasing modestly, according to the 2010 Edelman Trust Barometer. But in this climate, will good corporate responsibility performance translate into increased trust among key audiences? That depends on how your business goes about executing its sustainability strategies, as we learned in a discussion with three leading thinkers on corporate responsibility and trust in business.
What is the state of public trust in business today, and how has it changed over the past 10 to 20 years?
Edelman: According to data from the Edelman Trust Barometer, it’s come up from the low we had in 2009, but it’s very tenuous. When three quarters of people think that businesses are going back to “business as usual,” that tells you a lot. And when three quarters of people say that they want to see business partnering with NGOs on important issues, that tells you a lot as well. Business has lost the ability to act and lead unilaterally. That just doesn’t work anymore.
So, how has trust fluctuated over the past 10 years? It got crushed in the scandals of 2001 to 2003, it peaked in 2008 when the economy was going great, and it dropped precipitously in 2009.
Cramer: In my experience, redefining “business as usual” is a big part of this whole equation. Business as usual needs to evolve toward more interaction and partnership between business and others, more two-way communication, and more commitment from business to solve big global challenges. When people say “business will go back to doing things as usual,” it means that business will go back to doing things that are only in its own, immediate, short-term interest, not things that are in the broader public interest—and I think that’s where trust gets undermined.
While companies are increasingly integrating responsibility into their core business, this trend hasn’t always translated into increased trust. Is there a connection between corporate responsibility and trust?
Cone: If you look at corporate responsibility today at the most sophisticated levels—which is social issues engagement that is also about building the business—there are not that many companies that have executed that for a long period of time. So there’s a lag between the sophistication, the consistency, and the building of trust. While philanthropy has been around for a long time, social responsibility is newer. There’s not a long enough stream of execution, of results, of measurement, and then of communicating back. It’s just going to take time to catch up.
Edelman: I do think it’s the new normal to incorporate the sustainable business concept into the business. Look at Indra Nooyi at PepsiCo—this is performance with purpose. So it’s moved beyond philanthropy in many sectors, particularly in the extractives industry, in consumer products, and food, but in some other sectors, like financial services, I think it’s still philanthropy.
Cramer: On the one hand, trust comes from the intangible sense of whether fairness is present. It also comes from the tangible results that people can see, feel, touch, and benefit from. What’s interesting to me is that levels of trust have sometimes plummeted even when commitments to corporate responsibility are growing. When things are moving in opposite directions like this, you have to ask why. I think part of the reason is that people don’t yet see the results. People hear the words, but they don’t necessarily see what comes out the other side, or understand how something is different. If people sense a disconnect between words and actions, that kills trust.
What should business do to rebuild trust? Does building trust among different audiences—such as customers and the broader public—require different strategies?
Cramer: It’s not an easy question to answer simply. We’re seeing a big decentralization and fragmentation of audiences, and different people look for different things to demonstrate that an institution is delivering in a way that earns their trust. Some of this has to do with who can speak on behalf of a company. Companies can be the worst possible spokesmen for themselves. They need to have their stories told by third parties. It takes multiple channels, multiple messages, and multiple audiences—they’re all needed to really make trust happen.
Edelman: It takes consistent and constant engagement with all perceived stakeholders. You need to be not only engaging, but seen to be engaging, with all of your stakeholders. And it matters who speaks. It matters that it’s not just the CEO, as much as it’s people with specific credentials, meaning experts, academics, financial analysts, heads of NGOs, and employees.
Outside expertise is the essential ingredient for cementing trust among your stakeholders. Companies have a new job now, and that is to fertilize and create trust among all of its stakeholders.
Cramer: I couldn’t agree more. It used to be that a company would own 90 percent of its message. Now it’s as if companies are just part of a rolling conversation about who they are and what they are.
How do companies need to adjust their strategies to earn the public’s trust in the age of digital media and social networks?
Cramer: Multiple channels allow for a dialogue, not a monologue. We’re seeing this in the evolution of sustainability reports. Companies are embracing social media as the crucial way to communicate, and thinking of “reporting” as a verb, and not “report” as a noun. That’s one of the ways things are changing.
Edelman: Companies really need to be part of the discussion that’s happening on social networks. They cannot rely on mainstream media. They need to consider their own website to be a form of mainstream media. Every company is a media company. They have to have their own voice in the discussion.
Those companies that are on the cutting edge of this are allowing their audience to co-create the message. If you’re smart, you’re using your web and social media presence as an opportunity to let your stakeholders express themselves about you and your brand.
Cone: Companies need to have a lot of courage right now. They’ve got to let go of some control. But it depends on the type of company. It’s easier to do that if you’re a packaged goods or footwear company, but it’s not easy with financial services because there are a lot of legal and responsibility issues. So you’re seeing early adopters that have less at risk being courageous. But the bigger guys also have to be courageous. They have to test and learn.