Trust In Business Grows (Lance Turner Editor’s Note)

Business leaders have a lot on their plates these days. And now we can add another chore: saving the world.

That’s according to the latest Edelman Trust Barometer, an annual survey of more than 36,000 people across 28 countries that tracks people’s trust in business, governments, nongovernmental organizations and media. This year’s survey, Edelman’s 22nd, consists of 30-minute online interviews conducted from Nov. 1-24.

Many of the themes running through previous surveys continue in 2022. For example, trust in the media continues to sink.

Edelman notes that, during the last 10 years, trust in nearly all news sources has dropped. Social media, trusted by only 37% of respondents, saw the sharpest decline, down by eight points, followed by traditional media, trusted by 57% of respondents, which fell by five points. Search engines, trusted by 59%, fell by three points. And an all-time high of 75% of respondents expressed concern over “fake news” being used as a weapon.

But another theme has emerged in the last decade or so: greater trust in business. And with that has come the growing expectation that businesses and business leaders must lead and engage with societal issues. That role has increased as people’s trust in other institutions — including government — has eroded.

“By an average of [a] five-to-one margin, respondents in the 28 countries surveyed want business to play a larger role on climate change, economic inequality, workforce reskilling and addressing racial injustice,” Edelman said when it announced the latest survey results on Tuesday. The survey also showed:

• Nearly 60% of consumers buy brands “based on their values and beliefs.”
• Nearly 6 in 10 employees “choose a workplace based on shared values and expect their CEO to take a stand on societal issues.”
• Sixty-four percent of investors seek investments in businesses “aligned with their values.”

“Business must now be the stabilizing force delivering tangible action and results on society’s most critical issues,” Edelman CEO Richard Edelman said. “Societal leadership is now a core function of business.”

Also last week, investors received their annual letter from Laurence D. Fink, the founder and CEO of investment giant BlackRock, the world’s largest asset manager, with $10 trillion under management as of this month.

Fink, whose company holds stakes in just about every major publicly traded firm you can think of, has been outspoken in his belief that business must engage on big social matters — that capitalism extends beyond profits and into the realm of social responsibility.

In practice, it means that, in the last five years or so, BlackRock has paid increasing attention to a company’s environmental, social and corporate governance when it makes investing decisions. That’s led to quick changes. For example, as The New York Times put it on Tuesday, “Within weeks of his telling leaders in 2020 that climate change would become a ‘defining factor’ in how BlackRock assessed their companies, many blue-chip businesses announced plans to become carbon-neutral or carbon-negative.”

Fink has a clear view of what the Edelman survey has shown. “Employees are increasingly looking to their employer as the most trusted, competent, and ethical source of information — more so than government, the media, and NGOs,” he wrote.

What’s more, he thinks that focusing on these societal issues — topics that many CEOs would have actively avoided 25 years ago — can make companies better and profits bigger. A component of that success is greater affinity between companies and their investors, customers and employees. Recognizing that attracting and retaining a high-quality workforce is a critical challenge right now, Fink makes the case that savvy CEOs who lead on key social issues — the environment, racial equity — can connect with employees in a big way.

“These themes are now center stage for CEOs, who must be thoughtful about how they use their voice and connect on social issues important to their employees,” Fink wrote last week. “Those who show humility and stay grounded in their purpose are more likely to build the kind of bond that endures the span of someone’s career.” Those who do not, he wrote, do so at their own peril.

You can get the new Edelman survey at arkansasbusiness.com/edelman22. And you can read Fink’s full letter at arkansasbusiness.com/fink22.

Lance Turner is the editor of Arkansas Business.