Members of the public strongly support businesses taking action on social issues, according to the latest global Edelman Trust Barometer.
More than nine in 10 respondents to the global survey of more than 34,000 people in 28 countries see it as important for their employer’s CEO to speak out on issues such as climate change, income inequality, the impact of automation on jobs and diversity.
Ninety-two per cent say it is important for their employer’s CEO speak out on one or more of those issues.
Almost three-quarters of people surveyed (73 per cent) believe a company can take actions that both increase profits and improve conditions in the communities in which it operates. Richard Edelman, the CEO of public relations firm Edelman, which conducts the survey each year, says business has “leapt into the void left by populist and partisan government”.
“It can no longer be business as usual, with an exclusive focus on shareholder returns,” he said. “With 73 per cent of employees saying they want the opportunity to change society, and nearly two-thirds of consumers identifying themselves as belief-driven buyers, CEOs understand that their mandate has changed.”
Belief-drive buyers choose, switch, avoid and boycott brands as they see fit. Sixty-four per cent of those surveyed identify as consumers who expect brands to act.
Eighty-seven per cent of those surveyed said stakeholders, not shareholders, are most important to long-term company success.
The survey was released at the World Economic Forum (WEF) in Davos in Switzerland in the third week of January. The theme of the forum is "stakeholder capitalism," with a particular focus on climate change and how big business is responding to it.
Edelman has also updated the way it measures trust this year. “People’s expectations of institutions have led us to evolve our model for measuring trust,” Edelman said.
“Trust today is granted on two distinct attributes: competence (delivering on promises) and ethical behavior (doing the right thing and working to improve society). It is no longer only a matter of what you do – it’s also how you do it.”
This year’s survey results showed that none of the four institutions were seen as both competent and ethical. Business was seen as the most competent institution, but was rated unethical, while NGOs were seen as the most ethical group but recorded a negative score for competence.
Australian trust levels fall
On the global trust index, Australians level of trust fell 1 per cent from 48 per cent in 2019 to 47 per cent in 2020. Many people are pessimistic about their economic prospects and the survey shows that income inequality now affects trust more than economic growth.
Only a third of Australians believe their families will be better off in five years’ time, according to new research showing declining trust in institutions.
The latest global Edelman Trust Barometer found that 83 per cent of people fear losing their jobs due to factors such as automation, a looming recession and the gig economy.
In Australia, 53 per cent of people say they fear being left behind, while only 32 per cent are optimistic their lives would improve in the coming years.
Specifically, 60 per cent of Australians are worried about losing their jobs due to the gig economy, 51 per cent either due to a looming recession or lack of training or skills, 49 per cent due to foreign competitors and 48 per cent due to immigration, 45 per cent due to automation and 41 per cent due to jobs moving abroad.
The ‘trust chasm’ between elites and masses
Trust levels among the informed public in Australia were at 68 per cent, far higher than the 45 per cent recorded among the mass population.
The study also found that a growing "trust chasm" between elites and the public that could be a reflection of income inequality, Edelman said. “We now observe an Alice in Wonderland moment of elite buoyancy and mass despair," he said.
While 65 per cent of the worldwide informed public (aged 25-65, university-educated, in the top 25 per cent of household income) say they trust their institutions, only 51 per cent of the mass public (everyone else, representing 83 per cent of the total global population) say the same.
"The result is a world of two different trust realities," the report says. "The informed public - wealthier, more educated, and frequent consumers of news - remain far more trusting of every institution than the mass population.
"In a majority of markets, less than half of the mass population trust their institutions to do what is right. "There are now a record eight markets showing all-time-high gaps between the two audiences - an alarming trust inequality."
A record number of countries are experiencing an all-time high “mass-class” trust divide, spreading from the developed into the developing world. Globally, there is a 14-point gap between the informed public (65) and the mass population (51). There are double-digit gaps in 23 markets, including Australia (23 points), France (21 points), Saudi Arabia (21 points), Germany (20 points), the UK (18 points) and Spain (17 points).
Business tops competence ranking
This year’s results reveal that none of the four institutions is seen as both competent and ethical. Business ranks highest in competence, holding a massive 54-point edge over government as an institution that is good at what it does (64% vs. 10%). NGOs lead on ethical behaviour over government (a 31-point gap) and business (a 25-point gap). Government is perceived as both incompetent and unethical but is trusted more than twice as much as business to protect the environment and close the income inequality gap. Media is also viewed as incompetent and unethical: a majority (57%) don’t believe the media does a good job of differentiating opinion and fact but find them invaluable on covering news (58%).
“After tracking 40 global companies over the past year through our Edelman Trust Management framework we’ve learned that ethical drivers such as integrity, dependability and purpose drive close to 76% of the trust capital of business, while competence accounts for only 24%,” said Antoine Harary, president of Edelman Intelligence. “Trust is undeniably linked to doing what is right. The battle for trust will be fought on the field of ethical behaviour.”