The State of Trust in Business

The global communication firm Edelman released the 2020 edition of its "Trust Barometer" survey during the World Economic Forum in Davos, Switzerland last month. The new survey found that despite low levels of unemployment in most of the markets covered, many people aren't optimistic about their prospects for the future. About two-thirds of the survey respondents said they do not have confidence that their current leaders can successfully address their country's challenges.

Edelman has been conducting an annual survey on the state of trust around the world for the past 20 years. The Trust Barometer survey focuses on trust in four societal institutions - government, business, non-governmental organizations (NGOs), and the media. The latest survey polled over 34,000 people in 28 countries.

The 2020 Trust Barometer survey found that the overall level of trust has changed little over the past year. Edelman's global Trust Index (the average percent trust in NGOs, business, government, and media) was 54 in the 2020 survey, compared to 53 in the 2019 survey. On average, trust in all four societal institutions increased slightly, but both government and media are still distrusted in most of the countries included in the survey.

Trust has become a major issue for business and marketing leaders over the past few years because of growing concerns about the collection, protection, and use of personal information by business organizations. The Trust Barometer survey doesn't directly address privacy-related trust issues, but it does provide insights about the general level of trust in business. These insights are important for marketers because they describe the "trust environment" in which marketing activities are conducted.

The findings of the 2020 Trust Barometer indicate that public perceptions of business are somewhat ambivalent. Overall, survey respondents trust business organizations as much as they trust NGOs, and significantly more than they trust government and media. Based on the Trust Index scores, business organizations are "trusted" in 12 of the countries included in the survey and "distrusted" in 7 countries. In the 9 remaining countries (including the U.S.), business earned a "neutral" Trust Index score.

In the United States, trust in business has remained relatively stable over the past 5 years, as the following chart shows:

The ambivalent views of business can be seen in several specific findings from the 2020 Trust Barometer. On the positive side, business was the only societal institution that survey respondents rated as competent ("good at what it does"). The net competence score for business was 14, compared to -4 for NGOs, -17 for media, and -40 for government. Respondents gave business fairly high marks for generating value for owners, being an engine of innovation, and driving economic prosperity.

On the negative side, 56% of the global respondents agreed with this statement:  "Capitalism as it exists today does more harm than good in the world." (Note:  "Only" 47% of U.S. respondents agreed with the statement.) In addition, 54% of the global respondents said that business "serves the interests of only the few," while only 29% said that business "serves the interests of everyone equally and fairly."

So how should business and marketing leaders interpret these findings, and what can they do to bolster trust in their company? When interpreting the results of the Trust Barometer survey, it's important to remember that Edelman focuses on business generically - as one of four societal institutions. The survey did not ask respondents about their trust in individual companies. It's not surprising that the respondents had ambivalent feelings about "business" as an institution.

The good news is that business and marketing leaders can identify what they need to do to increase trust in their company. In a December 2019 survey of 2,200 U.S. adults, Morning Consult asked participants what factors are very important when considering whether to trust a company. The following table show the 11 factors that were  identified by more than 50% of the survey respondents:

These results are noteworthy because they show that when U.S. consumers are deciding whether to trust a specific company, they place greatest importance on factors relating to reliability. Protect my personal data - make products that work as advertised - deliver on what you promise - treat your customers well.

Morning Consult also presented survey participants several factors that embodied aspects of social and environmental responsibility, but except for "treat employees well," none of these factors were rated as very important by a majority of survey respondents.

I am not suggesting the business and marketing leaders can safely ignore environmental and social issues. Numerous recent surveys have found that younger consumers and business buyers are placing increased emphasis on environmental and social factors when deciding what companies to buy from.

There is also a growing focus in the investment community on so-called "ESG" (environmental-social-governance) investing. For example, 2019 research by Morningstar found that in 2018, there were 351 "sustainable" funds available to U.S. investors, up from 235 such funds in 2017. This research also found that 2018 was the third consecutive year these funds had received record cash inflows.

So it seems clear that environmental and social issues are becoming more important when it comes to earning trust, but right now, the most important factors still relate to reliability.

Top image courtesy of chuks mbata via Flickr CC.