Public trust in the world’s leading institutions is severely faltering as a major survey concluded no major institution is both competent and ethical. Worse still, the majority of people believe capitalism is doing more harm than good.

Despite a strong global economy, the 2020 Edelman Trust Barometer, now in its 20th year, found that a feeling of inequality and fear about the future among the public is driving a general distrust in society’s institutions.

The survey, which polled more than 34,000 people in 28 countries across the globe, found that none of the four key institutions measured - business, NGOs, government and media -were considered as both competent (delivering on promises) and ethical (doing the right thing and working to improve society).

While business was the only
institution seen as competent, holding a 54-point edge over government as an
institution that is “good at what it does” (64% versus 10%), NGOs lead on
ethical behaviour over government (a 31-point gap) and business (a 25-point
gap).

Government is perceived as both
incompetent and unethical but is trusted more than twice as much as business to
protect the environment and close the income inequality gap.

Stakeholders, not shareholders

An overwhelming majority (87%) of
respondents stated stakeholders, not shareholders, are most important to a
company’s long-term success, while 92% said it was critical that their corporate
leaders speak out on issues such as climate change, diversity, income
inequality and ethical use of technology.

Meanwhile, a majority of
respondents in every developed market said they do not believe they will be
better off in five years’ time, while 56% believe capitalism in its current
form is now doing more harm than good in the world.

“We are living in a trust
paradox,” Richard Edelman, chief executive officer of Edelman said. “Since we
began measuring trust 20 years ago, economic growth has fostered rising trust.

“This continues in Asia and the
Middle East but not in developed markets, where national income inequality is
now the more important factor. Fears are stifling hope, and long-held
assumptions about hard work leading to upward mobility are now invalid.”

The concerns are wide-ranging and
deep. Most employees (83%) globally are worried about job loss due to
automation, a looming recession, lack of training, cheaper foreign competition,
immigration and the gig economy.

The class divide

A record number of countries are
experiencing an all-time high “mass-class” trust divide, spreading from
developed into the developing world. While 65% of the informed public said they
trust these key institutions, only 51% of the mass public said the same. 

Business (58%) is the most
trusted institution, taking the lead role in global governance, according to
the survey.

Recent decisions by the Business
Roundtable to endorse a stakeholder model for American multinationals, the
initiation of Business for Inclusive Growth focused on fair wages by French
multinationals, and the advocacy campaign Business Ambition calling for firms
to help limit global temperature rise to 1.5°C, show the broader responsibilities
now on corporations, the report said.

“Business has leapt into the void
left by populist and partisan government,” said Edelman. “It can no longer be
business as usual, with an exclusive focus on shareholder returns. With 73%
percent of employees saying they want the opportunity to change society, and
nearly two-thirds of consumers identifying themselves as belief-driven buyers,
CEOs understand that their mandate has changed.”