Globalisation and business – the challenge of reclaiming trust in societyFollow @PwC
Well managed market economies have served as the basis for social progress - but what do increasing concerns about trust tell us about the future of business in society?
The opening of new markets, the availability of diversified sources of products to consumers, and capital for investment and the sharing of knowledge and talent have all helped businesses expand and accelerate social progress around the world.
Millions have been lifted out of poverty: the share of the global population living in extreme poverty has fallen from 40% just 30 years ago to below 10% today.
Yet, the assumption that business is good for the system as a whole is now being challenged.
PwC’s recent CEO survey reveals the large gap between how CEOs and the public view the impact of globalisation: only 38% of the public believed globalisation has had a largely positive impact on improving the movement of capital, people, goods and information, compared to 60% of CEOs. Both CEOs and the public are voicing concerns about the increasing loss of trust in business. People’s legitimate worries over their prospects are fueling populist movements and political dynamics. This trust breakdown poses a potent risk to political, economic and social systems the world over.
What’s eating away at public confidence in business occurs on two levels: personal and societal. Personal, in that people lose trust in companies as a result of breaches of data privacy and ethics (84%) or IT outages and disruptions (71%). Societal, because the public have higher expectations of a business, and its social role and responsibility – irrespective of whether they are its customer.
The impact on CEOs has also been significant. In 2003 70% of the CEOs surveyed thought corporate misdeeds posed little or no threat to growth. Today 59% of CEOs worry about the lack of trust in business as a threat to growth. 85% believe it’s important to run their business in a way that accounts for wider stakeholder expectations.
The 2017 Edelman Trust Barometer report supports these findings, illustrating that ongoing globalisation and technological change are further weakening people’s trust in global institutions. People believe governments, business, media and NGOs have failed to protect them from the negative impacts of the globalisation trends. The report concludes that the trust collapse has now evolved into a systemic threat.
We cannot turn back globalisation. Neither can countries operate in isolation. Too many factors including technology, international business, climate change, immigration and a host of others have implications beyond the borders of any one country. So how do we retain and re-balance the positive progress of a globalised world with delivering for people in their local communities? How can we measure success beyond GDP and make sure that economies can better serve a dual goal - to deliver both financial and societal outcomes for citizens?
We know that we need to realign business, economic and societal outcomes but how should we evolve society’s current systems to build the kind of future we really want?
The debate has started, but it will require a louder voice from business – working with policy makers and the public -- to contribute to the conversation to help address these critical challenges.
Colm Kelly is the Global Tax and Legal Services leader for the PwC network. Prior to his current role, Colm was Vice Chairman, Operations for the PwC network. Colm was previously a member of the PwC Global Tax Leadership Team with responsibility for Global Tax Strategy and Markets. He was also a member of the European Tax Leadership team for several years. Read more