Boards need to work to rebuild trust in business

Encouraging responsible leadership by company boards so that businesses contribute to wider society was the theme of the recent discussion organised by the European Confederation of Directors’ Associations (ecoDa) and Standard Life Investments. This was building on a vision of the role of business begun by the World Economic Forum.

Entitled Building trust in boards – supporting responsive and responsible leadership the discussion centred on two recent worldwide surveys by PwC and Edelman. Both PwC’s CEO survey and Edelman’s Trust Barometer launched at Davos suggested that there is now loss of faith in businesses and that companies must do more to rebuild trust.  However CEOs believe that modern technology and communications believe that gaining trust is more challenging according to the PWC study which also found that 69% of CEOs say it’s harder for businesses to sustain trust in the digital age.

business trust Ecoda

Ecoda chair: Companies need to work to rebuild trust

Turid Elisabeth Solvang ecoDa chair said: “Now is not the time when business and industry can afford to stand on the sidelines. Boards of directors and senior managers have to take concrete steps to ensure that companies benefit from the trust not only of their shareholders but of all their stakeholders.

Lutgart Van den Berghe, Chair of ecoDa Policy Committee reacted to the two surveys by acknowledging that “boards need to be aware that decision-making behind closed doors, as they used to do, is no longer feasible in the new digital era. The volume of information is no longer the reference, it is its  relevance to all stakeholders that matters”. She added that “Disclosure is not the same as transparency”.

Mike Everett, Governance & Stewardship, Standard Life Investments explained that as well as the interaction the fund manager has with a company’s management through its analysts, it will also endeavour to engage with the chairs of boards and non-executive directors to allow Standard Life Investments to assess the individuals involved in the management and oversight of their most significant investments. It is only through such engagements the fund manger can start to get a feel for the levels of trust those individuals have in their ability to deliver.

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