Monday 23 January sees the launch of the 2012 Edelman Trust Barometer – with its core message that trust in government has fallen dramatically worldwide, and that business now has the opportunity to shift from protecting its License to Operate to properly earning its License to Lead. There is a global sense of citizens rising – expressed dramatically in the Arab Spring and on the streets of London and Moscow and articulated and enumerated clearly in this year’s Barometer findings. False politicking with economics, wellbeing and societal good has been overwhelmingly rejected by the 25,000 surveyed across 25 countries, who are placing their trust instead in fellow citizens (‘regular employees’ and ‘people like me’) at the expense of the worn hierarchies of old. Europe, still in the throes of economic and political turbulence, offers a magnifying glass on this compelling world view…..
Twelve months ago, the 2011 Barometer carried an image with the headline ’48 hours to save the Euro’. One year later, and the Eurozone crisis remains un-resolved: country ratings have been down-graded; at least one nation teeters on the brink of default; and markets fluctuate with increasing volatility. More importantly, the reality of crisis, the sentiment of “this country is headed in the wrong direction” and, above all, the failure of leadership is accurately and starkly reflected in the 2012 Trust Barometer data.
Of course, the Euro was not the only crisis to sweep through the region in 2011: from riots on the streets of London to protests on the streets of Moscow; the Arab Spring and the resultant regime change in North Africa and the Middle East; phone hacking scandals and also a painful reminder of race relations issues in the UK – plus a fragile relationship of trust in the police. Now, the spectre of unemployment looms larger than ever before – with the UK at a sixteen year high and levels of youth unemployment in Spain hitting 40%. All is not well in EMEA and the young are understandably restless and increasingly angry.
The EMEA region (Europe, the Middle East & Africa) – and, more specifically, the Eurozone – now sits in the very crucible of Trust. The global findings of the 2012 Barometer (the decline of government and business’ opportunity to earn the license to lead) are accentuated across EMEA, as trust continues to democratise and diversify across all channels and institutions.
The net effect is that EMEA is now, without doubt, a region of Distrusters. On the composite trust scores, only the Netherlands secures ‘Trusted’ status at 61% – and even that usually stable country has seen a significant 8% composite decline in trust. Globally, Distrusters are about half (11 out of 23 countries). When focused exclusively on the Eurozone countries, 7 out of 9 countries are Distrusters. Scepticism has engulfed the region. Russia suffers the ignominy of being the least trusted of all 25 countries surveyed globally. Bear in mind, though, that the region was always tipping towards dis-trust. Trust in business and government has never been that high anyway – EMEA has lived for a while with the vacuum of the approximate 50%.
Government – seen to be paralysed and failing to deliver on its promises – is surely the originator of this 2011 Trust crisis and the evidence suggests that, from government, the contagion has spread to trust in business also. France has seen trust in government plummet from 49% to 31%; in Spain (admittedly, polled pre-election), the fall is equally dramatic, from 43% to 20%; Italy (pre-Monti) collapsed from 45% to 31%. And, in Russia, trust levels fell 13 pct points to 26%. Only Germany remained stable within the Eurozone countries (leveling at 33% trust in government), while German trust in Business took the hit instead, falling from 52% to 34% during 2011. In France, the decline in business trust was from 48% to 28% and, in Spain, from 53% to 32%. Spain’s descent into a state of distrust is just as dramatic as Japan’s trust collapse post Fukushima.
Mapping the crop of S&P recently ‘downgraded’ Eurozone countries against the Trust data, it becomes clear that there is a direct correlation between the paralysis of leadership and the shockingly steep declines in Trust. The average fall in Trust in Government for the three most recently downgraded nations (France, Spain, Italy) was from 46% to 27%, compared to a fall of 6% pts (to 44%) for those who escaped the downgrade. Governments who, un-democratically to some, embarked upon the ‘gigantic monetary experiment’ that is/ was the Euro, are now paying the Trust price.
In Business, the downgraded segment fell from 55% to 41%, versus a 57% to 46% drop for the others. Curiously, Ireland, which had an election early in the year, saw Trust in Government rise 15 pct points to 35%, though essentially acknowledging that Ireland remains at the bottom of its own bathtub: mostly flat on trust numbers but still depressing. Last year, Ireland recorded a (rather worrying) record 6% level of Trust in banks and bankers and that group has suffered another painful year. At 29% and 28% respectively, Financial Services companies and Banks across Europe remain the least trusted of all the industry sectors surveyed. The French took their revenge on their bankers (down 29 pct points to 23%), as did the Germans on theirs (down 4 pct points to 19%). Again, the trust data reflects the reality of a parlous, paralysed year and a region in crisis.
While (as explained below) Business still has an opportunity to step forward and lead, scepticism abounds and business will now need to come to terms with leadership in an era of low and conditional trust.
At least those surveyed believe that Business leaders are less likely than Government leaders to just tell lies. Here, the data is equally shocking, though. On the government front, so the data says, EMEA is, quite simply, a region of liars. Respondents stated that in Italy (73%), Spain (69%), UK and France (66%) and Germany (65%) they just do not trust government leaders to tell the truth at all. At all. The Business leader ‘lying’ numbers are lower but still of concern, oscillating between 40%-50%. Unlike in the 2008/9 Crisis, business is not being made to carry the can – but this is hardly a champagne moment.
The election landscape looks interesting – and somewhat challenging for Putin and Sarkozy. If the Trust data is a reflection of popular sentiment, real challenges lie ahead. In France, 73% believes that the country is heading in the wrong direction; the figure is 55% for Russia. There is a vacuum of leadership, ready for others to fill. Worries abound in France about the rise (again) of the Right. This time it is Marine Le Pen and not her father but the message is the same.
In the UK, PM David Cameron is suffering from his own very particular Trust dynamic. While his anti-Eurozone stand on ‘protect the City at all costs’ seems to have played well for trust in government, there is a yawning gap of how he is rated for expectations versus delivery. On ‘listening to citizens’ alone, the government expectations vs. performance gap is a shocking 58%, making something of a mockery of his Big Society play. The summer riots have taken their toll. Of those who said the riots impacted their trust in various groups, only 4% of adult respondents trust young people more than they did twelve months ago compared with 30% trusting young people less. Politicians score no better: 36% trust them less than they did a year ago; the police – enmeshed in the riots and the hacking scandal – are trusted 27% less than one year ago.
Yet Britons have seen a clearer pathway on trust in media in general. Surprising some observers, this has jumped by 15% points to 37% among informed publics across the year – although further investigation shows that there is now a clear delineation between more credible commentariat broadcasters and broadsheets and the tabloid gossip-peddlers who have been tarred by phone hacking scandals. The BBC retains an astonishing 87% level of trust (Ipsos Mori poll Nov 2011), for example, while it should not be forgotten that it was a newspaper (The Guardian) that chased and then broke the phone hacking story. In the business world – and across the region – serious media outlets are seen to have provided a more coherent and authoritative narrative to the financial crisis – as witnessed by a 16% increase in informed Brits’ trust in Traditional Media (to 32%). It can be said that not all media is now equal.
The rise (or return?) of Social Media is part media-story, part citizen renaissance. Trust in authority figures continues to disperse and citizenship rises across EMEA. Big ratings boosts were seen for ‘people like me’ and ‘regular employees’, as well as for social media itself (up 7% pts, admittedly off a low base) – emphasising the long-term shift away from traditional institutions and ‘established’ hierarchies and the continued democratisation of trust. Across nine EU countries, trust in CEOs is down 14% points to 30% as trusted spokespeople; a government official (sometimes known as a regulator) is there alongside him or her – also at 30%. A regular employee is now trusted to the same level (51%) as an NGO spokesperson – possibly proving that real people/ real citizens can now bridge the conscience deficit, once the sole preserve of the NGOs. And citizens, of course, are becoming increasingly vocal on the need for both business and government to do real societal good. This is a call for values-led leadership – as seen also in the global data in the 2012 Trust Barometer. Of course, the Arab Spring and, to an extent, what happened in Russia pre-Christmas, were visceral and violent manifestations of citizens rising – but the peacetime equivalent can also be seen in this year’s Barometer.
Much can be learned from the stakeholder expectation gaps of institutions – in EMEA, just as worldwide. Business holds a slight but still significant advantage over government – the latter suffering an average 44% point deficit between public expectations and delivery. Business only suffers a 27% point deficit – and scores fairly well on the core competencies around products, innovation and profit. But the data tells us that business has much more to do on the societal front: helping the environment; partnering for good; treating employees fairly. If Business Competence is established then (as with the global responses), Societal Competence still has some way to travel; and fundamental Engagement Behaviours (Transparency, Listening, Active Participation and Partnerships for Good) are now mandatory. Business leaders across EMEA would do well to consider this three dimensional approach of operations, social responsibility and engagement to building/ maintaining/ protecting trust. If 2011 was about Profit with Purpose, 2012 is about Profit + Purpose + Engagement. This is a big message for business in the region. When people clamour for ‘more regulation’, they are often just asking for businesses run on values, not compliance. When the cry goes up for ‘transparency’, the simple ask is for accountability and responsibility again.
What this tells us, of course, is that – if it moves to fill the vacuum left by government – compliance alone will not be enough for business. EMEA, and the Eurozone in particular, is craving real leadership, which is properly values-based. Business needs to increase its social footprint (through social networks but also as part of its wider social responsibilities) and to re-discover its citizen-values – if it is both to participate and to lead.
Eighty-plus years ago, John Maynard Keynes wrote that ‘the businessman is only tolerable so long as his gains can be held to bear some relation to what, roughly and in some sense, his activities have contributed to society’. If the Trust data in 2011 told us that Milton Friedman is dead (the social responsibility of business extends beyond the profit motive), then maybe the 2012 findings suggest that Keynes is re-born. With serendipitous wisdom John Plender quoted this recently in his FT article on Capitalism in Crisis – the FT, itself, a haven of trust in an age of dis-belief.
If EMEA is the crucible, then the Eurozone is the centre of that crucible where trust burns most fiercely. So many of the global findings are reflected in the EMEA research – yet amplified and accentuated for the world to see. It is January 2012 and we still have 48 hours to save the Euro. This is the challenge of government. But the opportunity for business extends far beyond this. Wealth creation and sustainable economic development drives trust and the wealth of nation-states sure needs boosting now. No-one can be in it alone; nor is mere compliance or business competence enough. Without a drive for real social reform and towards real, societal values – and without a new approach to business, based on public engagement – the EMEA crisis could deteriorate further still. Business can do it, of course. Radical social change, from the mills of New Lanarkshire to the factories of Port Sunlight, was born in Europe. ‘Better regulation’ means helping the drive for change flourish and providing a progressive fiscal framework within which this can more easily happen. Business needs to ‘play long’, for sure, and government needs to help business get there.
Pessimists may argue that the year ahead is not going to be a pleasant or an easy one. Optimists, however, will see not only the positive challenges of citizenship, but also a real opportunity for the next generation of values-led business visionaries to become the new ‘political’ leaders of the period forward. Whichever way the story plays out, the fragility of trust remains – and those who do step forward and lead will henceforth be held to account by citizens and stakeholders on a more acute and more transparent footing than ever before. Albeit by accident, the crucible of Europe may yet be at the vanguard of where the world goes next on trust.