have we lost trust in business?

WE'VE HEARD A LOT ABOUT TRUST LATELY

Trust in government and institutions is at an all-time low. Trust in banking, already bad, has fallen even further since the start of the Royal Commission. 

When trust disappears, something critical to our society is lost.

At The Ethics Centre, we spend a lot of time talking to regulators, directors and business leaders. We know that fundamental questions are being asked: What went wrong? Who’s responsible? How do we restore trust?

Our research suggests that the concept of trust may be less relevant than that of ‘legitimacy’. What’s the difference? Trust is a belief that a person or organisation will meet their obligations. Legitimacy is the right to claim a status, role or function. Legitimacy, in other words, grants business the social license to operate.

What happens when companies do bad things? 

Consumer boycotts are sometimes effective and certainly grab headlines. The temptation is to cry out for more laws and regulations, but they can only do so much.

In times of crisis, companies are prone to blame a few ‘bad apples’. But increasingly we’re demanding accountability from leaders and boards; we’re asking questions of the corporate cultures that allow, and sometimes enable, bad behaviour.

The ethical foundations of a company are the driving force for corporate responsibility and legitimacy. The framework of purpose, values and principles - what is “good” and “right”- forms a bedrock for all decisions, behaviours, systems and processes.

What should we do when companies behave badly?

A world without trust: revisiting corporate law  

 Get insights on the current issues of trust and loss of limited liability, and a framework to participate in the current market economy. This whitepaper lays out the four fundamental values and principles you need to minimise the risk of corporate failure and the potential for unlimited liability. It enables your purpose, values and principles to be used to guide behaviour and to leverage for the most difficult decisions within an organisation.

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At The Ethics Centre, we work with a range of organisations from sectors such as sport, media, tertiary education, mining and energy, trade unions, medicine, financial services and government. We help them to navigate the complexity and uncertainty of difficult ethical issues and build robust cultures with the capacity to develop and support strong leaders. Our professional team designs and delivers services providing advice and practical support to develop ethical capabilities at the individual, organisation and industry levels. Our free ethics helpline, Ethi-call, provides a private and safe space for people to explore ethical challenges and seek support to make sound, ethical decisions.

WHAT is The Ethics Centre?

Talk to our Advice & Education team
advice@ethics.org.au 
T +61 2 8267 5700
www.ethics.org.au 

ethics.org.au

We think it’s worth revisiting the history books. The modern version of the corporation has only existed since the mid-Nineteenth Century - and with it the extraordinary privilege of limited liability. Corporate misconduct is forcing society to ask: does the whole idea need a rethink?

whitepaper: trust, legitimacy & the ethical foundations of the market economy

Corporate transgressions are eating away at public trust. Despite resistance to more regulation, market conditions are ripe for regulators to consider eroding limited liability.

General population don’t believe present system is working**

53%

65%

CEOs concerned about the lack of trust in business*

89%

Over-regulation is a top threat to growth*.

*Source: PWC, 21st Annual Global CEO Survey
 **Source: Edelman Trust Barometer 2017

Trust in institutions declines, Edelman 2017**

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