Between a (Black)Rock and a Hard Place
Updated: Jan 6
The annual Edelman trust barometer is always an eye opening study. The geographical breadth of the 28 country study, with over 32,000 respondents, and its longevity, being now in its 22nd edition, allows anyone interested in the science of trust to understand reputational trends.
A key finding this year is that trust is declining for governments and the media so that business is now seen more trusted. It is no surprise that governments and the media is declining – after all:
· The UK Prime Minister is in a perilous position because of parties held at 10 Downing Street in breach of his government’s Covid-19 restrictions;
· The former President of the United States incited his supporters to storm Congress, yet members of his own party failed to hold him account for his actions;
· Social media platforms appear unwilling to effectively clamp down on online abuse and allow racism, homophobia and other prejudice to be shared freely.
There are many other examples I could site. Edelman found that 76% of those surveyed felt “fake news” was being used as a “weapon”. There are conspiracy theorists from both the left and right who claim the media is acting against the interests of the general public – citing multiple examples. Having worked for 20 years in the media I don’t want to believe their arguments, yet sometimes you can see why they might think that way.
But is it fair to expect business to step into the breach?
Larry Fink, CEO of the world’s largest investment group Blackrock, wrote this week in his annual letter to CEOs of companies Blackrock invest in, that: “It’s never been more essential for CEOs to have a consistent voice, a clear purpose, a coherent strategy, and a long-term view” adding that shareholders “do need to know where we [CEOs] stand on the societal issues intrinsic to our companies’ long-term success.”
Also this week a group of over 100 billionaires and millionaires called for greater taxation og the rich saying that they don’t pay enough tax.
Yet only last week leading investor Terry Smith attacked companies’ obsession with “purpose” and ESG (environment, social, governance), particularly focussing on Unilever saying: “ A company which feels it has to define the purpose of Hellmann’s mayonnaise has in our view clearly lost the plot… (spoiler alert — salads and sandwiches).”
And we are assailed by stories of business malfeasance. For example KMPG, the accountant, has been fined and reprimanded multiple times by the UK auditing regulator, the Financial Reporting Council, yet it remains as a leading advisor to many thousands of the world’s largest businesses.
On tax, governments and the public vent their frustration at corporations who use multinational structures to minimise the tax they pay – with the big tech firms often cited as the worst offenders. Yet consumers still buy Apple products and shop via Amazon, and investors (including Blackrock) still buy their shares – creating companies with market values of $2.8 trillion and $1.6 trillion respectively.
As for bad corporate actors – the frat boy culture at Call Of Duty computer games maker Activision Blizzard, with accusations of misogyny and sexual harassment, did not stop Microsoft agreeing to pay around $70 billion for the business.
Larry Fink – when specifically talking about climate change – says business cannot act on its own, saying: “We need governments to provide clear pathways and a consistent taxonomy for sustainability policy, regulation, and disclosure across markets.”
If you read this across, is the leader of “stakeholder capitalism” calling for regulation to ensure businesses do the right thing? But aren’t governments losing trust? Larry Fink probably has more power to affect change than almost anyone – perhaps save Presidents Xi, Putin and Biden. If he wants change to happen, Blackrock needs to name and shame a few corporate offenders, putting them publicly on the naughty step.