Workiva Named Category Leader
Rebuild Trust with Corporate Social Responsibility Reporting
January 23, 2013
An Update from the World Economic Forum in Davos, Switzerland According to research presented today at the World Economic Forum, banks are now even more discredited in opinion leading media than historically troubled industries like tobacco and nuclear power. The results are based on detailed analysis of hundreds of thousands of media reports in leading international business publications and TV news programs. In the banking sector, trust continues to fade with no signs of improvement. The situation is particularly striking in the U.S. where almost 70 percent of TV news stories about banks have a clearly negative tone. The vast majority of these news stories focus on customer relations and products offered by the banks. Make no mistake trust is fading across the entire industry and is not specific to individual banks. Why should banks be concerned about this? There are a few reasons why they should be concerned. Firstly, the amount that banks are paying in fines to regulators is increasing exponentially since 2007—even if the sums concerned are relatively small compared to the turnover of major financial institutions. Secondly, such an unprecedented poor reputation in TV media is driving increasing public concerns about banks and their role in society, just as it did for tobacco and nuclear power in the past. Politicians, who have a highly developed sense of what matters to the public, have already started to pick up on this and where public concern goes politicians follow with regulations. It is no coincidence that tobacco and nuclear power are also among the most regulated of all industrial sectors, and that media focus on the federal reserve, central banks and regulatory authorities for increased supervision of the banking sector is rising steadily. License to Operate There is however an even more important reason why banks should pay more attention to their crumbling reputation: license to operate. Without a license to operate there is no more business, no more profits, no more jobs. In the wake of the Fukushima Daiichi nuclear disaster it only took the German Federal government a few days to withdraw definitively the license to operate of the entire German nuclear industry and establish a new nuclear-free energy policy for the country. Politically this is a relatively easy thing to do for a very unpopular industry. Of course society will always need banks, or more correctly banking services. However this is not nearly enough to guarantee the perennity of today's banks because there are a lot of other companies starting to offer banking services to the public, such as insurance companies, car companies, and supermarkets. The good news therefore is that even if banks gradually lose their license to operate they will be replaced by new players with new business models—a bit like Pan Am and TWA (and lots of others) who failed to adapt to a changing world with changing values and innovation from low cost carriers. Is it possible to reverse the reputation collapse of the banks? Yes, but it will take a long time to undo the accumulated negative image, and secondly it will require a lot of transparent and sincere dialogue to rebuild trust with the banks' many stakeholders. The Wdesk collaboration platform can assist banks in the execution of their Corporate Social Responsibility (CSR) strategy by helping them prepare frequent reports that can support transparency and dialogue. Reference: C. Kolmer, R. Schatz & M. Vollbracht 'Trust Meltdown IV' Media Tenor (2013).