Investors. Consumers. Employees. Suppliers. They all want—even expect—the companies they associate with to operate with transparency and trust. But lately, trust has been in short supply. In the U.S., for example, trust in institutions—government, business, media and NGOs—declined a record 23 points in the annual Edelman Trust Barometer survey, which covers 28 markets around the globe. Business alone saw a 10-point, year-over-year decline. Clearly, companies in America need to focus on rebuilding trust, but how?
Embrace Corporate Social Responsibility
Corporate Social Responsibility (CSR) and Environmental, Social and Governance (ESG) criteria can play a significant role in establishing or regaining trust. What do CSR and ESG entail? CSR involves implementing a business model that includes accountability—to stakeholders and consumers—on a range of societal and environmental issues. Similarly, ESG focuses on how companies tackle key issues such as climate change and human rights, which financiers increasingly consider alongside traditional financial factors when evaluating investment portfolios.
Stephen Hahn-Griffiths, Executive Partner and Chief Research Officer at Reputation Institute, notes, “The top companies with stronger CSR scores have improved in reputation and stakeholder support with CSR. They have demonstrated their leadership is actively engaged in CSR, and their commitment to the cause is driven by action not just about rhetoric.” LEGO is a great example. Last year, it achieved the top spot on the Reputation Institute’s global CSR ranking, ahead of perennial leaders Microsoft and Google. Earlier this year, LEGO announced a goal to use sustainable materials in its core products and packaging by 2030, beginning with its first bricks made from sugarcane-based plastics coming later in 2018. While the company experienced a decline in profits last year, attributed to over-production, LEGO has seen consistent revenue growth over the past 12 years.
And it’s not just investors, shareholders and consumers are paying attention to whether companies operate responsibly and ethically. In a Business News Daily article, Susan Cooney, head of global diversity, equity and inclusion at Symantec, points out that “The next generation of employees is seeking out employers that are focused on the triple bottom line: people, planet and revenue.” So, how can your company overcome the current trust crisis and deliver on these expectations?
Implement Trust-Driving Processes
Beyond declaring a commitment to corporate social responsibility, companies need to develop processes that support the goal of ethical business operations—both internally and across global supply chains and other third-party networks. Certification to the ISO 37001 anti-bribery and corruption standard is a good starting point.
Drafted over the course of four years by delegates from 56 countries and seven organizations from corporate, legal, academia and government, the ISO 37001 standard is designed to help companies decrease the reputational, regulatory, financial and strategic risks related to corruption. It provides a business framework for preventing, detecting and addressing bribery—and unlocking the competitive advantages of transparency and trust. Potential benefits include:
- Reduced risk of FCPA violations and costly fines and restrictions related to such violations
- Improved monitoring and verification of anti-bribery activities among suppliers and business partners
- Streamlined compliance processes that save time and money
- Increased consideration during bid processes over non-ISO 37001 compliant organizations
Proactively managing corruption risk is more than a legal compliance issue given the current trust crisis and the speed at which bad news spreads across our digital landscape. ISO 37001 establishes a framework for implementing measures that are “reasonable and proportionate” to your company’s unique risk profile. This includes:
- Adopting an anti-bribery policy and related procedures and controls
- Engagement of top management and board-level leadership, as well as a senior-level compliance manager to oversee implementation
- Undertaking bribery risk assessments
- Performing risk-based due diligence on business partners and transactions
- Requiring compliance across the supply chain, beyond Tier 1 suppliers
- Providing training and ongoing communication on ethical business, identifying bribery risk and whistle-blowing
- Ongoing monitoring and effectiveness audits of the program being implemented
Companies must do more than ‘talk the talk’ to realize advantages from CSR and ESG. According to a 2017 Cone Communications CSR survey, 65 percent of Americans do research to see if a company is being authentic in their commitment to social or environmental issues and among Millennials, that percentage increases to 76 percent. If your company wants to earn a trust advantage, you need to establish CSR and/or ESG programs that deliver transparency and measurable value. In today’s reputation economy, organizations that achieve CSR and ESG goals will have a leg up on their competition when it comes to attracting investors, top talent and customers.
For more than 40 years, LexisNexis has been helping companies build and maintain trusted relationships using our versatile technology and comprehensive global intelligence to support a risk-based approach to due diligence and on-going monitoring. With better insights, companies can make informed, data-driven decisions.
Because good profit comes from making the right strategic decisions.