Trust in Government Plunges to Historic Low

NEW YORK, Jan. 20, 2014 /PRNewswire/ -- The 2014 Edelman Trust Barometer reveals the largest ever gap (14 points) between trust in government and business. Driven by the decimation of trust in government and not an increase in business trust, the gap was 20 points or greater in nearly half of the 27 countries surveyed, including the U.S. (21 points), India (26 points) and Brazil (36 points). Trust in business has stabilized at 58 percent due to the perception that it has made demonstrable change in the form of better products and new leadership.

Trust in government fell globally four points to an historic low (44 percent) making it the least trusted institution for the third consecutive year. The drop in government trust among informed publics was even more dramatic on a country level, plummeting in the U.S. (16 points to 37 percent), France (17 points to 32 percent) and Hong Kong (18 points to 45 percent). Populist sentiment is evident in the fact that among the general population trust in government is below 50 percent in 22 of the 27 countries surveyed, with strikingly low levels in Western Europe, particularly in Spain (14 percent), Italy (18 percent) and France (20 percent).

"This is a profound evolution in the landscape of trust from 2009 where business had to partner with government to regain trust, to today, where business must lead the debate for change," said Richard Edelman, president and CEO, Edelman.

The Barometer reveals that business is now expected to play a much bigger role around the debate and design of regulation as 79 percent believe government should not be working alone when setting policy. A majority of respondents (84 percent) believe that business can pursue its self-interest while doing good work for society. And 74 percent believe that business should be involved in formulating regulation in the energy and food industries.

"It has typically fallen to government to create the context for change but it is either incapable or unwilling to do it," said Edelman. "People trust business to innovate, unite and deliver across borders in a way that government can't. That trust comes with the expectation and responsibility to maintain it. Therefore, CEOs must become chief engagement officers in order to educate the public about the economic, societal, political and environmental context in which their business operates."

But there is call for more regulation in several industries including financial services (53 percent), energy (51 percent) and food and beverage (48 percent). Regionally, the study found that 66 percent want more regulation of the financial services industry in Germany, 73 percent of people in the UK want more regulation of the energy business, while in China, 84 percent desire stronger regulation of the food industry.

"Business cannot interpret these shifts as a chance to push for deregulation as it did a decade ago, that would be a huge error in judgment," said Edelman. "Events of the past 12 months, including the $13 billion fine for J.P. Morgan and the largest-ever bankruptcy in Latin America with the failure of Eike Batista's EBX deepwater oil drilling firm, coupled with the memory of the recession of 2008, have renewed concerns about business' ability to self-regulate."

The Barometer identified four key factors driving trust in business; industry sector, enterprise type, CEO trust and country of origin. Technology (79 percent) and automotive (70 percent) were once again the most trusted industry sectors, while banks (51 percent) were least trusted with dramatically low trust levels in Western Europe; Spain (16 percent), Italy (23 percent), UK (32 percent), Germany (33 percent) and France (38 percent).

Globally, family-owned (71 percent) and small- and medium-sized businesses (68 percent) are more trusted than big business (61 percent). In North America, family-owned (85 percent) and small- and medium-sized businesses (78 percent) are far more trusted than big business (45 percent). Asia Pacific is the only region where family-owned (62 percent) and small- and medium-sized businesses (65 percent) are not the most trusted enterprise type. Publicly-traded companies (74 percent) are the most trusted in that region.

Trust in CEOs has plateaued, and while they have recovered from a low of 31 percent in 2009 to 43 percent this year they still rank seventh out of eight, sitting only above government official (36 percent), as most credible spokesperson. Academics (67 percent) and technical experts (66 percent), a "person like yourself" (62 percent) and employees (52 percent) continue to be far more trusted. CEOs can build trust in themselves and their companies by communicating clearly and transparently (82 percent), telling the truth regardless of how unpopular it is (81 percent) and engaging regularly with employees (80 percent).

"Engaging with stakeholders must be viewed as a team effort," said Alan VanderMolen, vice chairman, DJE Holdings. "CEOs must continue to lead, but to do it effectively they now have to inform and empower employees and academics. So whether it's discussing possible regulation, supply chain management or the reaction to a crisis, CEOs must work in concert with those who are viewed as being more credible."

Companies headquartered in BRIC nations continue to suffer a trust deficit compared to western-based companies. Globally, respondents rated companies based in Germany, a market known for efficiency and productivity, highest (80 percent) followed closely by Sweden (79 percent) and Switzerland (79 percent), both of which are known to have strong policies aimed at protecting the environment and employees and communities. Companies based in Mexico (34 percent), India (35 percent) and China (36 percent) were trusted least and have seen no improvement over the past five years.

There are consequences to this lack of trust. The 2013 Trust Barometer Emerging Markets Supplement revealed that only one third of developed market respondents would want BRIC-based companies to "buy a company in your country" (35 percent), "buy a minority share in a company in your country" (38 percent) or "make a major investment in a new plant or office in your country" (39 percent). This year's Barometer also shows a major disconnect between the view BRIC-based respondents have of their home-grown companies compared to the rest of the world. Trust of China-based businesses among Chinese respondents is 76 percent compared to 36 percent globally and 21 percent in the U.S.

Since the 2008 economic crisis it has become evident that developing innovative products and making money are now mere table stakes in developing trust. Operational-based attributes, including financial performance and being recognized as a "best" place to work, were more than twice as important in 2008 (76 percent) as they are in 2014 (36 percent). Greater importance is now placed on engagement and integrity-based attributes such as treating employees well (59 percent), listening to customers (59 percent) and exhibiting ethical and transparent practices (56 percent). This year, the study identified specific behaviors that will help improve the perception of a company's performance against these attributes, including ensuring quality control in products (86 percent), protecting customer data (85 percent) and respecting employee rights (85 percent).

"It's the responsibility of business to redefine and re-prioritize the way it thinks about value," said Ben Boyd, global practice chair, Corporate, Edelman. "Today's world requires a shift from the historic, transactional nature of capitalism to a model of value creation that encompasses societal benefit as well as shareholder value.

Other key findings from the 2014 Edelman Trust Barometer include:

• Trust in media dipped back down to 2010 levels decreasing five percentage points globally to 52 percent. Nearly 80 percent of the countries surveyed reported trusting media less compared to last year. However, there was a slight uptick in trust in all media sources including online search engines (65 percent), traditional media (65 percent), hybrid media (54 percent), social media (47 percent) and owned media (45 percent).
• NGOs remain the most trusted institution globally at 64 percent. With trust levels above 50 percent in 23 of the 27 countries surveyed it is the most trusted institution in 20 countries and has higher trust levels than business in 20 countries.
• Company employees are the most trusted sources when discussing engagement (50 percent), integrity (37 percent), products and services (32 percent) and operations (34 percent).

About the Edelman Trust Barometer
The 2014 Edelman Trust Barometer is the firm's 14^th annual trust and credibility survey. The survey was produced by research firm Edelman Berland and consisted of 20-minute online interviews conducted October 16, 2013 – November 29, 2013. The 2014 Edelman Trust Barometer online survey sampled 27,000 general population respondents with an oversample of 6,000 informed publics ages 25-64 across 27 countries. All informed publics met the following criteria: college-educated; household income in the top quartile for their age in their country; read or watch business/news media at least several times a week; follow public policy issues in the news at least several times a week. For more information, visit: http://www.edelman.com/insights/intellectual-property/trust-2014/.

CONTACT:
Michael Bush
212.729.2181 
[email protected]

Video with caption: "The 2014 Edelman Trust Barometer is the firm's 14^th annual exploration of trust." Video available at: https://youtu.be/4mh0E6JA2aA

SOURCE Edelman