PART II

I must apologize for being so late coming back to the second part of my last post where I promised to deal with the low trust for our governments and possible remedies to this situation.

A simple review of the information available from surveys around the world makes one thing very clear. Citizens don’t trust their governments and their politicians and the levels of trust have dropped to new all time lows.

Attitudes and trust in government in the US

Americans are less positive and more critical of government these days. A recent Pew Research Center survey reveals a multitude of conditions associated with distrust in government –“ a dismal economy, an unhappy public, bitter partisan-based backlash, and epic discontent with Congress and elected officials”.

Citizens in the US don’t want an activist government to deal with the nation’s major problems. What they demand is for  government to  reform and its powers curtailed with the exception of greater regulation of major financial institutions, as well as  more government control over the economy. The graph below illustrates changes in the level of satisfaction with the state of the nation and trust in government over the past 32 years. As we will see later a very similar trend behaviour is exhibited in Greece.

Europe and the special case of Ireland

The latest Edelman Trust Barometer, highlights that in contrast to other European countries, Ireland is experiencing a profound and continuing trust crisis. Trust in government and business in Ireland is the lowest in Europe with the possible exception of Greece, with business falling from 38% in 2009 to just 31% in this year’s survey. This is against a global average of 50%. Government (or better the political process) scores a bit better but with trust levels plummeting to an all time low of 28% from 31%, against a global average of 49%. Trust in media and NGO’s has also fallen, but to a lesser extent.

According to the survey, the findings show that Irish people have the lowest level of trust in politics and business in the 22 countries surveyed. Conversely, countries such as the US, Sweden and France experienced a small increase in levels of trust, further underlining a deep institutional scepticism in Ireland. Ireland was the only country surveyed that experienced declines in trust across all four institutions, business, government, media and NGOs. According to the survey  “Ireland is experiencing a trust crisis which is different to the experience in other countries. Our scepticism is deep rooted and pervasive. While other countries are beginning to see increasing levels of institutional trust as their economies creep out of recession, we in Ireland have lost confidence in more institutions than ever before.

The recent case of Greece

The recent financial crisis in Greece lead to the involvement of the IMF in the economic affairs of the country. Severe measures were undertaken with profound effects in the life of the people. Such measures included  reductions in pensions, age limits, cut offs in salaries, steep increases in taxes both direct and indirect, further taxes on real estate  property to mention just a few. Although the measures are extreme, the people of Greece realize that given the situation these measures were to a great extent necessary. However this necessity did not reduce their feelings of disappointment which reached an all time high of 70,1% the highest since 1988. Other words that describe the mood of the Greeks are:

anger 57,9%,

fear 49,2%

shame  37,3%,

defeat 16,4%

Source: Bi-annual survey TRENDS of MRB Hellas

The latest measurement of TRENDS (June 2010), reveals that citizens in Greece when asked “how are things going in your country?” 91,1% answered badly or very badly and only 0,6% said good or very good, thus producing a negative index of -90,5% the lowest since 1989 when the index was -73%. This mood is also reflected in their answers to the question “which party can best deal with the country’s problems?” The socialist party in power gets just 30% and the opposition party only 20,3%. The answer “no party” collects an overwhelming 42,2% compared to a mere 15,7% in May 2004.

So, let’s summarize our thoughts. All evidence indicates ( GLOBESCAN Survey) that consumers around the world demand from business to be sincere, trustworthy, transparent and responsible, if they are to restore their damaged reputation and trust. In other words consumers concentrate on the concept of corporate citizenship and transparency. That’s why a solid CSR strategy is absolutely necessary for business.

In their role as citizens of their country the same people demand from their governments and politicians the exact same things. They demand from them to be honest and speak the truth and to give them hope for the future. However, there is a catch here. Hope by itself is not enough. People want hope which is based on firm foundations, will be sustainable and will be explained to them of how it will get them through the difficult  and sometimes brutal changes they are experiencing in their everyday life.

Only then, the people will begin to believe again in their leaders and will be willing to contribute to their country’s efforts.        `

Today we are witnessing a serious lack of trust among citizens around the world. Consumers are questioning the way big business is doing business. Consumers, citizens and taxpayers shocked by the collapses in the financial and real estate sectors, don’t trust big business anymore. And this mistrust has snowballed and affected almost all sectors of the economy. But even more serious is the deterioration of trust of the citizens for their governments and politicians. And this phenomenon is enhanced by the deep effect of social media.
Today we are witnessing citizens rioting in the face of the austerity measures that put their very lives in jeopardy. They are angry because they feel that governments and politicians were not honest and they shamelessly lied to them.
For too many years people in most countries were relying heavily on their government for the creation of wealth, the smooth functioning of the markets and for providing a safety net when in need. But today after the recent economic disaster we have lost the trust in our government as well.

We all must keep one thing in mind: trust is a very fragile concept. When it is cracked or damaged it’s very difficult to repair it.
If we consider our behavior as consumers we still buy our favorite brands or services from companies we know but our trust and esteem for them has seriously deteriorated. Especially after the global crisis we are much more demanding and more ready either to punish or reward businesses and brands. Extensive research in more than 30 countries (see link below GLOBESCAN) reveals that consumers and citizens are asking demanding questions about corporate citizenship and the ethics and transparency of management. We now associate trust not only with the quality and performance of products and services but also with the performance of business as a corporate citizen. Exactly the same holds true with the way we look at governments and politicians.
We might trust a brand’s or a politician’s competence and abilities but we don’t want to support them with our money or vote. The reason is simple: we feel they are not entirely honest and don’t treat us with respect.
Businesses in their effort to remedy this situation are resorting in the use of CSR and are investing even in the face of difficult financial conditions. However, they must be very careful because consumers are suspicious and question their good intentions. If they believe that a business is investing in CSR activity solely for its own good and gain, its efforts will be in vain.
If we ask what our politicians and our governments can do to gain back our lost trust the answers are a lot more difficult to find and the healing process will definitely be much longer. I’ll intend to come back to this issue on my next post.
GlobeScanRadar_CSR2010_Webinar_April8_v2

I have argued many times in this blog that the economic crisis contributed to a severe drop in trust in business. Americans and citizens in most countries express the belief that business cannot be trusted to act responsibly. This fact is supported by the global research carried out by GlobeScan’s CSR Monitor and this trend is increasing. And that is not the end of the story, as an ever increasing percentage of people in almost every country studied said more laws are needed to regulate corporate social responsibility.
The interesting finding is that the deteriorating trust for business is accompanied with rising expectations of business for corporate citizenship and social responsibility. with the majority of opinion leaders expressing the view that business has not done enough to address key policy issues ie. the environment

In the U.S. almost 3 out of 4 managers and entrepreneurs believe that today businesses must show leadership, and commitment in keeping corporate citizenship on top of their list of priorities.

Thus, while recognizing the financial pressures of the recession, citizens all over the world still expect companies to make corporate citizenship a core strategic goal of how they do business. There is however a difference in the way small businesses approach the issue. They are reluctant to fire their employees and grind their teeth in an effort to keep the working environment stable. On the other hand large corporations are more prone to laying off large numbers of workers but they compensate by keeping up with most of the corporate responsibility plans.

Today we are experiencing the greatest crisis of confidence
and trust in business and the markets since the 1929 depression.
This is a key factor contributing to the present economic downturn. The current financial situation causes significant business
and social challenges. We must deal with these problems and furthermore must act in ways that minimise the damage to long-term
business value.
The present crisis has many causes which I believe they show the importance that responsible business principles play in strengthening and restoring the damage caused to relationships with the market, our clients , our employees and suppliers.
There is strong evidence from numerous research studies that
responsible management of environmental and social issues
improves financial performance. Companies which have been
measured when they managed their corporate
responsibility through the Corporate Responsibility Index Tool
(CR Index) exhibited a better financial performance than
the rest of the industry.
Good corporate governance is instrumental in guiding responsible business practice, and contributes to
• positive workplace management,
• marketplace responsibility,
• environmental performance, community engagement
• and sustained financial performance.
If we ignore any of these critical areas we will probably experience an adverse impact on the overall performance and the competitive advantage of our business.
http://www.bitc.org.uk/

For some time now the Energy Race was driven largely by economic rather than ecological incentives. Governments, in cooperation with investors and entrepreneurs are stepping up efforts to reduce our dependence on fossil fuels. However, be aware that this mega goal won’t be easy or cheap, despite the fact that numerous innovative ideas are being developed around the world.
On the other hand, consumer awareness has been rising and interest in green products and the green way of life is surging. Consumers feel better about consumption when they choose brands and retailers that exibit a green philosophy and ethic. We expect businesses that adopt sustainability policies will gain competitive advantages in their markets.
A recent study by JWT addresses the issues.

Key Questions Investigated
• Why is clean energy an important goal, and how has it become a priority all around the world
• What is the role of the public sector in the Energy Race? or of the private sector? Which countries are making significant progress in this direction?
• What alternative energy sources are attracting the most interest and investment?
• How are consumer priorities are influenced by the issue of energy conservation, and how are businesses addressing these new priorities?

Key Findings of the Study
1.Climate-change skeptics have lost their footing, but the prospect of global warming is only one factor driving the Energy Race. The current international search for energy has serious political and economic consequences for governments and consumers.
2.However we should be aware that good intentions or modest inflows of money to this direction are not enough and also have the danger to raise expectations but result in mediocre energy savings
3. But at this stage, it’s unclear which clean energy solution will win. Many ideas are being developed that may in the future prove more viable than today’s leading options, such as solar power and wind energy.
4.As government and investors work together to fund green energy projects, more people are thinking about how they impact the planet and are acting accordingl by buying hybrid cars, and purchasing carbon offsets
5. There is no doubt that businesses who will lead these initiatives will gain competitive advantage.
6.Corporations and governments, both national and local, are fast coming to understand just how powerful, and profitable, an early role in the Energy Race can become.
However, one word of caution is appropriate especialy now that economies are in deep trouble and consumers are counting their scarce resources.

The 2009 research on the state of corporate citizenship sponsored by Hittachi corporation and conducted by Boston College confirms with hard data my belief that the recent economic crisis will not overall affect corporate responsibility activity. Smaller companies reacted mainly by concentrating their efforts in not firing their people, while large corporations engaged in layoffs but steped up their corporate citizenship programs. For the complete research report click here

The effort for the establishment of the Greek national index for Corporate Responsibility enters its second year. CR Index invites al interested companies to participate in this effort. During these difficult times I believe it is of utmost importance for companies to participate .

More information can be found at www.cri.org.gr

Since the begining of the financial crisis there has been a debate of whether investment in CSR would experience a downturn. As the argument goes  because of financial difficulties companies will refrain from putting money in CSR activities. I believe this is far from the truth. From what I see this might be true in some cases but all in all companies realize that they need now more than ever before to step up their activities in this area because they need to boost the trust of their customers to their products and services. Just pose and think how many sectors of the economy has suffered seeing their trust levels fall during the past months!

IEP (Institute of Communication) is conducting every year a survey of how  people in Greece think and react to the idea of CSR. This year the Institute is planning to also survey the business sector to measure what are their practices and what are they plan to do given the present economic situation.

For more information visit www.ioc.gr