How Business Can Restore Trust In Our Institutions
Not so long ago, here in the UK, we were enjoying an upward economic cycle. Income inequality was narrowing, the government passed the Human Rights Act into law and Tony Blair’s agenda of opportunity and prosperity for all was taking off. The 8 Millenium Development Goals aimed to ‘make poverty history.
Today, the world looks very different, and the aspirations set out in those 8 Millenium Development Goals feels further away. Particularly when it comes to gender equality, women’s empowerment and a global partnership for development.
When we think about the world today, we see the ugly blooming of eight big themes:
The battle for global supremacy – a declining US superpower versus the brute economic force and singular focus of China.
The re-emergence of old power struggles – Russia and the West, Iran and Israel, capitalism and its alternatives.
Seemingly unstoppable global macro effects – climate change, global displacement of people due to conflict and civil war, demographic change, inter-generational challenges, populism and the rejection of elites.
A return to strong-men leaders – Trump, Xi, Putin, Kim Jong Un, Erdogan, Orban, Duterte…
A battle between patriarchy and female empowerment, played out currently through the lens of sexual violence towards women.
Racism and increasing xenophobia encouraged by strong-men leaders who exalt nationalism.
The erosion of the norms underpinning our systems with the credibility of experts attacked and facts debunked as ‘fake news.’
And finally, and this is really what I want to talk about today, the loss of trust in international institutions that have given us common cause for generations.
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DEBUNKING THE MYTHS
First off, I want to start this article by debunking a few common myths. There’s a view that the system has failed and this is the result of globalisation. The fact is that billions have, and continue to experience, massive improvements in their fortunes due to globalisation.
The facts bear this out:
The proportion of the world’s population living in extreme poverty is, for the first time, below 10%.
Every day, the number of people around the world living in extreme poverty (categorised as less than about $2 a day) falls by 217,000.
A smaller share of the world’s people are hungry, than at any time in history.
Literacy – once the privilege of a small minority – now exceeds 85% and continuing to climb.
The number of middle class consumers in the world is now somewhere between 3 and 4 billion. Over the next decade, this group is expected to grow faster than at any other point in history.
Child mortality fell between 1990 and 2015, according to estimates by the Gates Foundation, 122 million kids’ lives being saved.
Undeniable gains have been made in health, income, education, life expectancy and physical safety.
Which is not to deny that there remains widespread inequality with an increasing number of people - often referred to as the ‘squeezed middle or JAMs (just about managing) – feeling that they’ve been left behind as they struggle to make ends meet.
Which is why you have so many people asking this simple question. Is the system designed to work for me, or is it set-up to work for others? Rich people, tax avoiders, corporates, global institution, migrant workers? It’s because this question has yet to be answered that we are seeing this crisis of trust.
THE LOSS OF TRUST IN INTERNATIONAL INSTITUTIONS
So why has this loss of trust happened?
In no small part, this loss of trust has happened because our leaders (and us) have failed to spot, and respond adequately to a range of undercurrents that have been shaping the public mood.
The perception that the benefits of globalisation are distributed unevenly and unfairly;
A growing divide between the haves and have-nots;
A feeling of not being in control which is why we hear the slogan ‘Take Back Control’ so often;
A set of unresolved issues stemming from the 2008 financial crisis and its aftermath;
How de-industrialisation, combined with automation, is completely reshaping the world of work;
And an unregulated internet and social media which has provided multiple channels and created echo chambers that expose and perpetuate our divides.
There’s no doubt that business has played its part in this erosion of trust. We only have to look at the following examples to understand why:
The collapse of Lehman Brothers which was caused by, and accelerated the collapse of the sub-prime mortgage market;
The Volkswagen diesel emissions crisis which has resulted in more than $20 billion in fines and compensation the company has had to pay out to date;
The BP Deepwater Horizon oil spill which caused the worst environmental damage in US history and payouts exceeding $65 billion.
The liquidation of Carillion, the UK’s second largest construction company, which buckled under the weight of its £1.5 billion debt;
And the collapse of retail giant British Home Stores after Sir Philip Green (who amazingly still hasn’t been stripped of his knighthood) sold the company to a serial bankrupt, after asset stripping it first.
When billionaires like Philip Green seemingly take no responsibility – and appear to feel no shame - for their part in the loss of 11,000 jobs and a high street institution, it’s small wonder public trust and confidence in business is eroded.
SO HOW DOES BUSINESS RESTORE TRUST IN OUR INSTITUTIONS?
So how can we, as business leaders, protect our democracy and rebuild trust in institutions? The answer is simple, although the execution is anything but. Leadership.
Political leadership which focuses on solutions to real long-term challenges, not short-term electoral concerns.
Responsible business leadership, which is what the public wants, that succeeds by being a force for social good.
Leadership from the media, including the social media giants, which stands for the truth and objective facts, and does not promulgate misinformation or ideologies.
And finally, civic leadership which recognises how individual action can benefit the common good.
The good news is business is leading the way in restoring trust in our institutions. You only have to look to my case study, How Unilever Is Winning With Purpose, to see how Unilever has succeeded in rising above its competition with a long-term vision and consistently strong performance while staying true to its sustainable living goals, as outlined in ‘The Compass,’ Unilever’s strategy for sustainable growth.
Over the coming weeks and months, I'm going to be exploring further how 'winning with purpose' drives profits, all the while restoring faith in our institutions. I hope you'll follow along and suggest the companies you'd like me to showcase.
Question: How can business restore trust in our institutions? Do you have a strategy for doing well by doing good in your business? I love reading your feedback so please do take a moment to share in the comments box below.
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