New study reveals banking crisis has reduced trust in all businesses

Trust in business has plummeted by 13 percentage points among younger generation according to the annual Business Ethics Survey conducted by Ipsos for the Institute of Business Ethics (IBE) and energy company Centrica.

The true impact of the banking crisis on public trust in business in general was today revealed, as the160Institute for Business Ethics (IBE) and160Centrica published the annual Perceptions of Business Transparency report. Following hard on the heels of the160Walker Review's final recommendations to reform corporate governance in the banking sector, the study found that half of British adults believe that the conduct of banks linked to the financial crisis has damaged their trust in all businesses. The report also highlights that businesses are facing a particular crisis in trust among 16-34 year olds. The research, conducted by Ipsos, reveals that the proportion of 16 - 34 year olds who believe that companies generally behave ethically has plummeted by 13 percentage points from 64 per cent in 2008 to 51 percent in 2009. In the face of this decline in trust, businesses are charged with rebuilding confidence by improving transparency - almost two-thirds of the British public (60 percent) are calling for businesses to explain how they make and spend their money to the public - not just investors. However, the survey reveals that the British public believe that businesses have not yet grasped the nettle on this issue, with the majority saying that they do not explain the way they conduct their business clearly enough (62 percent). More than half of those surveyed (59 percent) claim that they have not seen any changes in corporate openness and honesty in the last year, while a quarter (24 percent) believe that openness and honesty has decreased in the same period. Around three-quarters (76 percent) are cynical that this will change, believing that that most large companies won't be open and honest about their behaviour unless forced.

Philippa Foster Back OBE, Director, IBE commented:

"Trust is the bedrock upon which consumer confidence is built, and while British business has so far focused on finding routes to economic recovery, our report makes it clear that the recovery of public trust is equally important. In the last year we have seen a revival of sorts in public protest against perceived poor corporate ethics, in particular among young people. "In order to rebuild trust among consumers, employees and business leaders of the future, institutions must prepare to move away from their traditional investor-led, one-way methods of communication via dense and complex reports. While this crisis of trust appears to have been precipitated by the banking crisis, all businesses must prepare for a sea-change in which they build and sustain an open and honest dialogue with the public".

Catherine May, Group Corporate Affairs Director, Centrica plc said:

"At Centrica, we believe that the roadmap to recovering trust starts by openly acknowledging challenges and problems, and actively engaging with the public to listen and respond to their concerns. This is most important of all when it comes to customers, as their trust in a company is often driven by the way they feel they are treated as a customer. That's why we are opening our doors and inviting a panel of British Gas customers to come into our business, ask us anything and report back publicly on their findings. "This builds on our aim to take a `warts and all' approach to our corporate responsibility reporting by inviting stakeholders and the general public to post their comments online. We're also encouraging people to ask questions and share their views via a series of live webchats which I've personally taken part in and learnt a great deal from".

As well as indicating how business can rebuild trust, the study offers some encouraging signs of good faith in corporate behaviour. Those surveyed believe that if a company makes an increased profit in a downturn, it is most likely to be a result of efficient management, good products or services or planning well for the future. In the midst of the downturn, executive pay is currently the public's primary concern regarding corporate behaviour (42 percent think this is one of the top two or three issues which need addressing). Other Ipsos research shows that employment issues have risen up the public's list of priorities for business as their general concerns over unemployment rise, while the environment remains a priority issue for businesses to address (albeit not as high a concern as in 2008). Those surveyed feel that business must prioritise investment in employees, jobs and skills in the next few years, ranking the following as the five most important issues for business to pay attention to in the next few years:160

  • caring for employees (38 percent - a 6 percentage point increase on 2008);160
  • concern for the environment (29 percent - a 7 percentage point decrease on 2008);160
  • investing for the future (27 percent - a 7 percentage point increase on 2008);160
  • providing more jobs (26 percent - a 5 percentage point increase on 2008); and160
  • training the workforce (26 percent - a 5 percentage point increase on 2008).

Technical Note

Nationally representative quota samples of 1,014 British adults aged 15+, and of 981 British adults aged 15+, were interviewed throughout Great Britain on the Ipsos Capibus, across 157 sampling points. Interviews were carried out using CAPI (Computer Assisted Personal Interviewing),160face-to-face in respondents' homes between either 4 and 10 September 2009, or 18 and 24 September 2009. Data have been weighted to reflect the known national population profile.

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