Our world is in the midst of a powerful and challenging transition. We are moving from a social and economic order that was largely shaped by the Industrial Revolution, two major wars and the rise of the US as a superpower, to a new order that is defined by shifting political ideas, emerging demographic trends, such as ageing populations and the growth of the Asian middle class, and, of course, the rapid spread of disruptive technologies.
While the new order promises much that is good – the potential for us to live longer and healthier lives, benefit from broader prosperity and possibly live in a more just society – these promises can only be kept if we also tackle the negative side effects of change.
Already these include rising income inequality, uneven access to healthcare, diminishing financial security, political polarisation and geopolitical uncertainty. What’s more, additional side effects will undoubtedly emerge in future. So if we are to cement innovation in its rightful role as society’s friend, rather than its foe, we must commit to driving inclusive growth.
A distrustful society
Given the deep-seated inequalities that exist, it is no coincidence that an atmosphere of distrust pervades our changing world. The 2018 Edelman Trust Barometer remains at ‘distruster’ level, with 20 out of 28 countries surveyed rated as distrusters, up one from last year.
Distrust is rooted in fears of job losses due to automation and globalisation, the crisis of confidence in traditional authority figures and institutions that was sparked by the Global Financial Crisis, the consequences of massive global migration, and a growing unwillingness among people to believe the information provided by established news organisations, as well as search engines and social media platforms.
Trusting in business
Interestingly, however, in the markets where the loss of trust has been most extreme, business has retained the highest degree of trust and is expected to play a critical role in leading change.
For business leaders, this is a great opportunity, a great responsibility – and a great risk. Those who deliver long-term value, while acting with integrity and purpose, are likely to be revered, both by their business stakeholders and the wider community. Those who don’t could be reviled.
Edelman’s survey found that building trust is the most important job for CEOs, ahead of developing high-quality products and services. In fact, respondents believed that business leaders would be more effective than politicians at driving positive transformation, with almost two-thirds saying that they want CEOs to take the lead on policy change rather than waiting for governments to do so. We should feel very honoured by that positive endorsement.
The need for corporate governance
Good corporate governance is a vital component of the overall framework that enables CEOs to become effective builders of trust. At its heart, good governance comprises the balances, controls, people, principles, processes and strategies that can support a company to deliver sustainable and solid business performance, as well as inclusive growth.
Well-governed companies understand that their role is not only to make profits, but also to create value for stakeholders right across society. They acknowledge that they have an important role to play in building a more prosperous society in the long term. They also work with governments, policymakers, pressure groups, think tanks and not-for-profit organisations to effect positive change.
That’s why EY is working with the Coalition for Inclusive Capitalism, for example, to develop a new tool for businesses and investors that better reflects the full value that companies create and how they impact the world around them.
