Twenty years ago, public trust was not high on the business radar. Today, however, it has come into focus of 60% of the business community from all over the world, including Russia. People’s trust in companies, government institutions and the social system as a whole has dropped to a five-year low against the background of rapid and drastic changes in their lives caused by the globalisation and technology development.
According to PwC’s 20th CEO Survey, an annual survey among CEOs of the world’s leading market players, 58% of respondents globally and 60% in Russia are concerned about the lack of trust in their businesses. In 2013, the figures were 37% and 47%, respectively.
Another global survey, 2017 Trust Barometer by PRT Edelman Affiliate, a communications agency, shows that public trust in the four key institutions (business, government, media and NGOs) has fallen to its lowest level in five years. It applies to both Western countries and Russia. Disappointment in the current social system is common for all population groups, regardless of their level of income.
For business, the trust index stands at 52% globally and 39% in Russia. CEO credibility decreased the most, dropping by 12 p.p. to 37%, the lowest overall figure since 2001. In Russia, CEOs are trusted even less – by 34% of respondents, while government officials are only 22% credible.
The decline of public trust in business can be explained by many factors:
- people’s insecurities about various life aspects, regardless of their positions: extremely rapid changes result in the lack of social, economic or geopolitical stability;
- globalisation: the establishment of production facilities in cheap markets is perceived negatively by the general public as it reduces the availability of jobs and capital;
- higher unemployment due to the optimisation of business processes, automation and robotisation;
- wider gap between the rich and the poor, shrinking middle class, deeper social inequality;
- high level of corruption, bribery and tax avoidance;
- formalism, business bureaucracy, lack of genuine commitment to consumer interests;
- ecological problems due to the pollution from production facilities.
Digital technologies also pose serious reputational and financial risks to the business. According to the PwC survey, 69% of CEOs think that, in an increasingly digital world, it will be harder for businesses to gain – and retain – people’s trust. The most alarming for 87% of CEOs are social media risks. CEOs of Russian majors are particularly anxious about the following digitisation threats:
- IT outages and disruptions;
- cyber security breaches;
- breaches of data privacy and ethics;
- social media risks;
- confusion around who owns digital assets;
- uncertainty about how tax laws apply to digital assets;
- artificial intelligence and automation (including blockchain).
However, the business may mitigate these risks by shifting its focus on social needs. Companies need to invest in joint social projects with the government, undertake charitable initiatives and reduce their environmental footprint in the regions of operations.
Experts also recommend to improve transparency, increase corporate responsibility and promote trust in business among employees.