1. Rebuilding Public Trust Through Accountability and Responsibility
Address to the Ethical Corporation Magazine Conference
By Richard Edelman
President, Edelman PR
New York City
October 3, 2002

2. Agenda Today
Edelman Studies on Corporate Governance and Corporate Social Responsibility— tracking attitudes towards business, government, media and NGOs
Establish new approach—accountability and responsibility—as road map for business

3. Methodology
Research conducted January 2001, June 2001, January 2002, June 2002
Research among 850 Opinion Leaders
400 U.S. Opinion Leaders
450 European Opinion Leaders across the U.K, France and Germany
Opinion Leaders are respondents:
Aged 35-64
Household income $100K+ in US, $75K+ in Europe
College educated
Business and Media Attentive

4. Business Retains Trust
In the face of the storm, opinion leaders have not yet lost confidence in business as an institution. Business most trusted institution in Europe, #2 in US.
Perception that business is sound…but key elements of the system are flawed.

5. Government, Media, NGOs Fade
We are seeing the ebbing of the 9/11-induced rise in favorability for government and media.
The NGO message is being drowned out by twin issues of recession and terrorism, but they still dominate certain issues.

6. Trust in Institutions
Now I would like you to tell me how much you TRUST each to do what is right. Please use a 9-point scale where one means that you “DO NOT TRUST THEM AT ALL” and nine means that you “TRUST THEM A GREAT DEAL”. [TOP FOUR BOXES SHOWN]

7. US Trust in Institutions (Tracked)
Now I would like you to tell me how much you TRUST each to do what is right. Please use a 9-point scale where one means that you “DO NOT TRUST THEM AT ALL” and nine means that you “TRUST THEM A GREAT DEAL”. [TOP FOUR BOXES SHOWN]

8. European Trust in Institutions (Tracked)
Now I would like you to tell me how much you TRUST each to do what is right. Please use a 9-point scale where one means that you “DO NOT TRUST THEM AT ALL” and nine means that you “TRUST THEM A GREAT DEAL”. [TOP FOUR BOXES SHOWN]

9. NGOs Dominate Specific Issues in Terms of Trust (January 2002)

10. Brand Evaluator
Brand evaluation shows difference in attitude between US and Europe- NGOs are top three brands in Europe on trust while top three in the US are companies
This is unchanged since January 2001

11. Trust in Brands – January 2002

12. Trust in Brands – January 2002
Europe

13. Advisors in Trouble
Trust in consulting/advisory services low…lower than business in general
Particular suspicion of brokerage firms and management consultants, especially in Europe

14. Trust in Advisory Services
Now I would like to focus on your trust in industries that provide advisory services to businesses. Please tell me how much you TRUST businesses in each of the following industries to do what is right. Please use a 9-point scale where one means that you “DO NOT TRUST THEM AT ALL” and nine means that you “TRUST THEM A GREAT DEAL”. [TOP FOUR BOXES SHOWN]

15. Perception of Problem
European and US opinion leaders have similar perceptions…but more government seems not to be the answer…sense of “misleading marketing” shows risk to brand reputation of corporate scandals…low confidence in business “to fix it”

16. Perceived Problems in Corporate Behavior (US Data)
Percentage saying problem is “Extremely” or “Very Serious”

17. Perceived Problems in Corporate Behavior (Europe Data)
Percentage saying problem is “Extremely” or “Very Serious”

18. Low Confidence in Business to Solve Problems
Rank order by US data
Percentage saying they are “Extremely” or “Very Confident” in business’ ability to police themselves

19. CSR Data Tech Industry Ahead Gates Foundation Impact
Young, egalitarian industry—no environmental issues
Consumer-facing industries do better
CSR expected even during recession

20. Corporate Social Responsibility
By Vertical Market

21. Attitudes – CSR and NGOs

22. Engagement with Civil Society Now a Matter of Risk Assessment
Must look beyond traditional constituencies to employees and customers
Business seen as enabler and more powerful than government

23. Interviews with Six Major NGOs
Friends of the Earth
Greenpeace
Amnesty International
World Wildlife Fund for Nature
Transparency International
Human Rights Watch

24. NGOs’ View – “New Type of Risk”
“Banks assess risk, but mainly from a financial
point of view. We aim to create roadblocks for environmentally abusive companies – thereby
forcing the financial institutions to factor exposure
to controversy into their investment
decisions”

25. NGOs’ View – “Capitalism Good or Bad”
“Wall Street decisions impact the lives of folk half
way around the world.
Capitalism is not an automatic force for good.
We intend to make sure that it is.”

26. “I honestly don’t believe that many financiers
NGOs’ View – “Ethics”
“I honestly don’t believe that many financiers
truly understand the meaning
of ethics. It’s much more than insider trading.
What about the ethics of
protecting endangered species or the
rights of indigenous people. Their
common ignorance of these issues is unacceptable”

27. The Road Map How to connect in a world filled with mistrust?
What business can do?

28. The End of the “Inside Game”
Pyramid of authority gives way to sphere of cross-influence with multiple stakeholders
Continuous partial attention and pinging
Empowered consumers, intelligent employees
Speak simultaneously with all audiences– “paradox of transparency”

29. Rebuild Credibility from the Inside Out
Employees are the first line of connection with CSR as a real way to establish emotional link
Customer experience critical—dialogue, feedback, rational and emotional ties

30. CEO Profile
While the era of celebrity CEO is over, corporate leadership can not afford to hide
Need multiple interactions to establish trust
No single source of credibility

31. Issue Agreement
Percentage saying they “Agree” or “Strongly Agree”

32. Communication in a Credibility Vacuum
Need to be visible in media and to work with employees and customers in web of trust
Corporate advertising is not the way

33. Sources of Information: Credibility Ratings
In general, how credible do you feel each of the following sources is for information about a company? Is information about a company that you get from (INSERT SOURCE) extremely credible, very credible, somewhat credible, or not credible at all?
Rank order by US data
Percentage saying source is “Extremely” or “Very Credible”

34. You Have to “Be It”, You Cannot “Buy It”
Corporate responsibility is the key issue
Philanthropy important but secondary to actions of company

35. Defining Corporate Responsibility
People define corporate social responsibility many different ways. In your opinion, would you say that corporate social responsibility is more about a company’s philanthropic efforts, that is, donating money and resources to the community and charitable organizations or more about the ethics that occur within a company, that is, everything from the way a company treats its employees to their policies on social issues such as the environment?

36. Change Communication Process
Broaden group of stakeholders receiving regular information
Document annual progress on key issues through sustainability report
Engage in debate with NGOs
Empower local markets to connect with media & community

37. New Strategy for NGOs and Business—Preferred Dancing Partners
Advantages for NGOs include companies’ global scale, marketing prowess, flexibility/speed
Advantages for companies include NGOs’ credibility, link to employees and customers, expertise in distant markets
Government will listen if business and NGOs make common cause

38. What This Means
The end of business bashing and the beginning of constructive dialogue
Each disagreement should not wind up in a divorce
Large NGOs need to stand their ground when splinter groups move to preempt issues

39. Accountability and Responsibility—A New Standard for Companies
Proper disclosure of financial data important but not sufficient—also require true social responsibility
Business pledges to be transparent
There needs to be a specific agenda and tangible progress
Link to employees and customers

40. Conclusions Business has window of opportunity
CEOs must continue to be visible
Must rebuild trust from the inside out
CSR is major advantage in converged world of multiple stakeholders