Defining who and what is trustworthy is a tough call. Trust in business is almost unfathomable as a concept without breaking it down into sectors, sub-sectors, timescales, and the macro-economic landscape in which businesses are operating.
And then there is the question of who is evaluating this trustworthiness? Perhaps Gen Z is demonstrating much more rigour in their scrutiny of business and its leaders than baby boomers. Perhaps, also, Gen Z has for the first time developed the language with which to express their misgivings. But let’s not generalise.
What we do know is that Edelman has been measuring trust in business, government, media and NGOs for the past 21 years in its Trust Barometer – see the table below. The Trust Index is the average percent trust in the four categories of organisation shown in the table. For each one, respondents from the general population were asked how much they trust that institution to do what is right. As you can see, business is the most trusted organisation according to the 2021 Trust Barometer and has gradually grown in perceived trustworthiness across those 10 years. Media clearly has not had a good decade on the trust front.
The biggest overarching trend prior to COVID was the trust gap between the public and the ‘informed’ public, that is those who are more educated, wealthier, and frequent consumers of news. Among the informed public, trust in the business and trust in government rose largely in parallel over the years, but business has been more trusted than government every year since 2007. However, it is not that simple. There are many issues at play here that drive the responses to the Trust Index between the public and the ‘informed public’, including: income inequality, unemployment, economic growth, democracies, and the credibility of CEOs versus government officials. Distrust is being driven by a growing sense of inequity and unfairness in the system. The perception is that institutions increasingly serve the interests of the few over everyone.
Penelope Mantzaris, Senior Vice President, Edelman Data and Intelligence and a speaker on trust in business at Virtually Live 2021, points out that the 2021 study is especially interesting because of the COVID backdrop. “Over the course of the pandemic, we have conducted several Barometers to closely monitor trust. In May 2020 and we collected real-time data which showed trust in government had sky-rocketed ahead of the other institutions to become the most trusted for the first time in the Barometer’s history,” she says. “But, in the following six months, from May to January 2021, all institutions saw dramatic decreases in trust, giving back most (if not all) of the gains they saw in the Spring. And it was government that saw the biggest loss of trust, an eight-point decline.”
Hear more at Virtually Live!
ICAEW's flagship three-day digital conference returns for 2021 with a session exploring the importance of trust in business, as well as sessions on protecting human rights and fraud risks.
Going into 2021, business is now the most trusted institution. In fact, at 59% it is the only institution that is trusted and has increased its lead over NGOs. What is more, business is more trusted than government in 18 of the 27 countries Edelman measured.
At this time, many businesses were also taking the initiative to act in ways that gained the public’s approval. They were converting production facilities to help satisfy demand for protective clothing, medical aids, and supporting however they could. These initiatives were often highly visible and made a lasting impression.
“Prior to the pandemic, businesses were seen as competent but not ethical,” says Mantzaris. “And NGOs were seen as ethical but not competent. But, because of COVID, and the role that business has played in response to COVID, they’re more likely to be seen as both competent and ethical.”
The upshot is that people have demonstrated that they want to hear from CEOs, they want that information to be accurate, they want that information safeguarded and they want to see it is in good hands. In this way, trust between populations and business has been built – in a unique way – during COVID. This is an interesting direction of travel.
When Edelman started the Trust Barometer 21 years ago, people's trust in institutions was high but that trust dropped over the past two decades. During this period, it has also become clear that employees trust information from their employer much more than from the media or people they don’t know. She explains that this is likely to be the case because people have specifically chosen to trust their employer and be part of an organisation. “That creates a halo effect,” she says.
“But the other thing is that we've seen a real increase in employee activism and people feeling like they have a voice in relation to the company they work for. And people also believe they can hold businesses more accountable than they can potentially hold the government to account – partly through buying power. All of this enables businesses to step into this more trusted position.” ESG reporting, demonstrating the importance of the Sustainable Development Goals, messaging around purpose – this all helps with trust.
As some businesses are in the ascendant, we see some decline, especially in the tech sector. “Tech has traditionally been – and still is – the most trusted sector. But over the past few years, we see it declining quite rapidly,” she says. From 2018 onwards, the sector has been under scrutiny because of cyberattacks, hacks, GDPR concerns, the surveillance economy and global antitrust issues. Also, Edelman’s 2020 research found that people are specifically worried about new forms of tech: cell-cultured meats or gene editing, cryptocurrency, and personalised medicine or gene mapping – mostly because so much is unknown. Some people report that the pace of technological change is too fast, with new products occurring faster than meaningful regulation.
Financial Services has remained the least trusted industry over the past 10 years but has moved from a position of distrust to neutral trust in 2016 with the largest increase in trust over the long-term. However, it is worth noting that the ‘trust gap’ between the public and the ‘informed’ public is at an all-time high for the Financial Services industry, at 13pts difference in 2021.
What we are learning is that businesses must earn trust – it does not just happen. Trust is earned through CEOs embracing the expanded business mandate and by talking about issues such as sustainability, systemic racism, upskilling and leading with empathy. What is more, even though we have been living with a deadly disease in our communities, what people are worried about is its economic impact, not the disease itself, and they are looking to business for reassurance.
Read more from ICAEW Insights Trust in Organisations series here
Trust in organisations
Questions around public trust in companies, trust in the profession, trust in charities, and trust in government arise time and again. In this Insights Special ICAEW unpacks the building blocks of trust, and how organisations build, maintain or rebuild trust.View
Restoring trust in audit and corporate governance
‘Restoring trust in audit and corporate governance’ is the BEIS white paper that sets out proposals on strengthening the UK’s corporate governance framework and the way companies are audited. Read ICAEW’s views on the consultation, explore what restoring trust means, and share information on the reform agenda.View
Stay up to date
You can receive email update from ICAEW insights either daily, weekly or monthly, subscribe to whichever works for you.Sign up