Why Trust Is Key to Success For Business

November 03, 2023 (6 min read)

Trust may not appear in a company’s financial accounts, but trust has been called “the most powerful currency in business.” Customers, investors, employees and suppliers all want to work with companies that they consider to be trustworthy. As a result, the future is bleak for those companies who fail to take steps to build trust and transparency.

Trends suggest that trust has become more important for companies looking for long-term, sustainable profits. Surveys of young people show they want to work for, buy from and invest in firms that match their values, and benefit society.

At the same time, organizations operate in an increasingly complex and connected global business landscape in which they rely on third parties in different countries. This means they need to improve their risk management processes so that they have visibility over every stage of their supply chain.

In this article, we explore how different industries are being transformed by companies that have invested in transparency, fairness, and trust. These firms already see the benefits in their bottom lines and are set up for a profitable and sustainable future.

Fighting bribery and corruption in the extractives industry

The extractives industry carries a high risk of bribery and corruption. Extractive firms feature prominently in the all-time list of top ten fines under the Foreign and Corrupt Practices Act, with the $1.78 billion settlement paid by the Brazilian firm Petrobras in 2018 near the top of the table.

Numerous extractive firms have been accused of bribing officials in exchange for mining or drilling rights or damaging the environment and local communities in the area around their activity.

How mining company Anglo-American earns trust

Mining company Anglo American has taken a different approach. It scores in the top three of all six measures used to calculate the Responsible Trust yields pure gold for extractives Mining Index, including working conditions, environmental actions, community development, and transparency over tax. Anglo American works with local communities near its mines to provide training and development.

The company focuses on transparency, and it produces an annual report on its tax and economic contribution, which helped it to win the PwC Building Public Trust Through Tax Reporting award in 2015 and 2016. As a result, its shareholders are profiting.

One reason for this success is that the company’s trusted relationships with local communities and regulators around mines improves the chance of licenses being granted and a thriving local workforce. “The lack of trust between communities, governments and extractive companies is a significant issue,” said Jan Klawitter, international relations manager at Anglo American, at a supply chain conference. “Providing livelihoods, running enterprise development schemes, localizing supply chains is what makes the difference,” he noted.

MORE: 9 steps for better third-party anti-bribery and corruption due diligence

Earned trust helps the financial services industry

Ethical companies are flourishing in the financial services sector, as customers and investors look to move their money to companies they can trust. A 2019 Financial Times article declared that investment based on Environmental, Social, and Governance (ESG) considerations has “reached a tipping point”, and it has only continued. The Global
Sustainable Investment Alliance estimated at that time, ESG assets totaled $31 trillion worldwide. Those numbers have only increased since then.

Ethically focused banks are springing up around the world. For example, Triodos Bank was founded in the Netherlands in 1980 with a mission to finance companies which benefit society and the environment. It has expanded into Belgium, Germany, the UK and Spain, and has over 700,000 customers worldwide.

This trend is not limited to newer entrants to the market, but certainly affects how more established banks operate. Major banks have joined partnerships in which they demonstrate transparency by publishing information on money flows to stop modern slavery and financial crime.

MORE: What the updated Wolfsberg Principles mean for finance

Trust is crucial to consumer goods

The chocolate industry is big business. At its current rate of growth, it is predicted to reach $140 billion in value by 2024. It is also an industry with a high risk of forced labor in the supply chain, as a recent Washington Post investigation showed.

How Tony’s Chocolonely earns trust

A relatively new company, Tony’s Chocolonely, has based its business around tackling modern slavery and producing slave-free chocolate using five principles for sourcing and
producing chocolate fairly. Staff members visit growers at the bottom end of the supply chain to ensure they are paid fairly and the community around them benefits. Even the design of its bar—in rough, uneven chunks—aims to raise awareness of the unequal distribution of wealth in the industry’s supply chain.

In the past, investors may have balked at this approach, concerned that too much money is being spent on activities which do not generate profit. But Tony’s Chocolonely has had enormous success precisely because of its investment in transparency and fairness. Since its founding in 2005, Tony’s Chocolonely has become the most popular chocolate brand in the Netherlands with 20% of the market. The firm has recently expanded into the U.S. and the UK. In a nod to this success, more established chocolate brands are seeking Tony Chocolonely’s advice on how to improve their own sustainability records. These big brands have realized that, to grow or even maintain their sales in the future, they need to demonstrate they can be trusted.

Using certifications to earn trust

Another good example is the coffee industry. It is also seen as being unequal, with only 2% of the added value of a cup of coffee reaching producers. Moyee Coffee is a Dutch- Ethiopian firm which roasts, mixes, and packages coffee beans in the country of origin rather than in Europe or the U.S. as most big firms do. It uses blockchain technology to show the transactions at every stage of the coffee supply chain. A customer can see how much was paid to producers in Ethiopia. Moyee’s commitment to transparency and fairness has enabled steady growth despite a crowded market. Moyee now has outlets in the Netherlands and Ireland.

Moyee pursued certification as a B Corporation—businesses that meet the “highest standards” of ESG performance, public transparency and “legal accountability to balance profit and purpose”. This certification isn’t limited to companies in the food and drink industry. Alongside newcomers like Moyee, the list of certified B Corporations also
includes the apparel company Patagonia, ice cream giant Ben & Jerry’s, and multinational food producer Danone.

Companies can also use ISO 26000 guidance for social responsibility as a framework for meeting the ethical expectations of investors and consumers.

MORE: Do your third party partners align with your ESG commitments?

Transparency and due diligence are paramount for consumer trust

Major companies are waking up to the new reality that pursuing trust, fairness, and transparency is the surest way to guarantee long-term sustainability and profitability. To ensure you are meeting new legislation and avoiding problems with sustainability and human rights, while maintaining your ROI, you need a due diligence strategy to scrutinize every aspect of your organization. Not only will this allow you to avoid costly fines and legal issues, but it will also put you in the position to gain consumer trust, leading to a more profitable future.

To make sure your due diligence strategy is on par with the needs of today, check out our White Paper "The New Era of Due Diligence".

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