Davos 2012: Business needs to build trust

Despite the focus on Europe and its ailing currency, business responsibility was also on the Davos agenda with trust (or the lack of it) between business and society being the subject discussed. The high profile “Occupy” protests in New York, London, and this week in Davos, has focussed public attention on business behaviour and what it does with the wealth it creates.

A new survey by PR firm Edelman, whose President, Richard Edelman, spoke at the business leadership session, revealed that trust in business had fallen from 56% to 53% of respondents, while trust in CEOs fell sharply by 12% to 38%.  So why is trust declining?  There is an increased perception that business is bad and exploits rather than contributes to society’s development. Further, there is a belief that the current burden of austerity faced by Europe and US citizens is not being shared equally, with business taking less than its fair share. This perception is not helped by the large bonus payments made to bankers who are still seen by many of the as both the architects and financial beneficiaries of the crisis, and the increasing income  gap between those at the top of the corporate tree and those on average incomes.

The reality of business behaviour is somewhat different. Business behaviour and commitment to responsibility is higher that any point in the history of market capitalism. For example, the UN Global Compact, the world’s largest CSR platform, is growing rapidly as more CEOs seek to adopt improved business practice. So at a time when business is working in a more responsible way, and where corporate responsibility is a widely implemented business practice, there is a clear disconnect between business performance and its perception.  Society’s lack of trust demonstrates that business needs to do more to contribute to society’s development and to embed the principles of responsibility and development into core business strategy and not simply do business plus CSR.

One of the leading thinkers in this area of responsibility who may have a solution, is Harvard Professor, Michael E Porter, who has pioneered the concept of “Shared Value” which he discussed in Davos. His view of the possibility of applying business principles and models to tackling pressing social problems, aims to create value for both stakeholders and share holders by creating a profitable business which at the same time fulfilling a social need. Applying this in practice has the potential to build both profit and trust, and as a valuable additional benefit, deliver the possibility of deeper partnership between business, government and civil society.

Jock Mendoza-Wilson is the Director of International and Investor Relations at System Capital Management

Pictured: David Roth, president of the youth organisation JUSO of the Swiss Social Democrats (SP) uses a shovel to destroy the snow-built letters WEF beside the first igloo of the Occupy WEF movement at their camp site in the Swiss mountain resort of Davos January 16, 2012. The Occupy WEF members will stay in a camp of several igloos to protest during the World Economic Forum (WEF) which takes place from January 25 to 29. REUTERS/Arnd Wiegmann