MATT HARRINGTON:
We have four members on our panel, three in New York and one in London -- so we have a transcontinental conference this morning. I will make the introductions, and then I'm going to ask each of the panelists in the interest of time to pass the podium, or the baton if you will, onto the next speaker.

So in terms of the order of presenters this morning, first we have Richard Edelman, who's the President and CEO of Edelman. Richard has extensive experience in consumer marketing and reputation management, serves on the boards of the New York Historical Society and the Center for Disease Control Foundation, and is a member of the World Economic Forum. Next week he will be sharing the findings from the study that he shares with you this morning with this year's attendees' at Davos.

Next we have Lesley Gelb, who has really been a participant in each of the four audience groups that are the focus of our study -- those being government, NGOs, media and business. Currently president emeritus of the Council on Foreign Relations, Les has had a distinguished career as well at the New York Times as columnist, deputy editorial page editor and editor of the op-ed page, and is a recipient of the Pulitzer Prize. He's also worked in both the Johnson and Carter administrations, and serves as a member of various corporate boards. So Les this morning will offer a perspective in terms of the findings from the 2004 Trust Barometer as it relates to government and media.

Our third panelist is Michael Deaver. Mike is vice chairman of Edelman providing strategic counsel across a broad array of corporate, private and governmental interests. For more than 20 years Mike served as one of Ronald Reagan's closest advisors -- both in Sacramento as well as in Washington, where he served as assistant to the president and deputy chief of staff.

He appeared most recently last Friday speaking about the study on CNBC Power Lunch, discussing the findings, and he will address the success strategies that we take away from the findings for CEOs and corporations in general.

And then last but not least we have Sean Barrett in London. Sean most recently served as the senior director of communications and campaigning at the International Secretariat of Amnesty International in London. His career as a communications and campaign professional has encompassed a focus on social issues including antismoking, obesity, HIV-AIDS, cancer screening and child support issues.

And Sean will speak to the findings as it relates to the NGO community. We will hear from each of our panelists, and then I will be back to moderate a Q&A session where we have mikes around the room that will help our panelists hear your questions. So with that I'm going to turn it over to Richard to share this year's findings.

Back to top

RICHARD EDELMAN:
Thanks. Morning everybody. Why did we start this process five years ago? We had seen the Battle of Seattle and we started to see tremendous divergence between attitudes in Europe and the United States towards the NGO sector. That's the beginning of it. Then we carried on because we started to have trust issues in business. Enron and Anderson and I could keep going.

More recently we have had trust issues in the media. Yesterday's piece about USA Today, earlier activities in the New York Times and four months ago -- Jason Blair. So we have serious trust issues in society and our Trust Barometer aims to help business understand the dimension of these trust issues and perhaps what could be done. So let's go right to the state of trust. We surveyed 400 people in the United States. We also did 150 people in three European countries and in Brazil. We also did 200 opinion leaders in China.

China's a little harder because there's China right, big. We did China on the coast as they say. Ours is intended to give you a sense, not an exact quantitative but within margin of error sense of the world, the state of trust. So I'm going to begin with trusted institutions. And we track this every year. What we find is that the state of trust is business and government are the most trusted institutions in the United States -- pretty much in a dead heat. In Europe it's business and NGOs.

There are significant differences within Europe. You have business and NGOs as the most trusted in the U.K. In France NGOs are clearly ahead. In Germany there's low trust in all institutions. It's a generally sour feeling that somewhat reflects the attitude toward the economy. China. Of all the countries we surveyed, trust in institutions is highest in China. They're on a roll and it reflects in the numbers.

Finally Brazil, actually despite the difficult economic situation, opinion leaders feel quite confident about what's happening in Brazil. They like their government. So if you look at it on a comparative basis China is the most trusting of the six countries we surveyed. Then Brazil, then the U.S. Europe is further down. There's a bit of a convergence of the U.S. and the U.K. in terms of attitudes and trust. France and Germany at the far left. Brazil and China at the far right, if you want to look at it that way.

Trust in NGOs -- an important fact: They are still the number one trusted institution in France, also in Brazil. However, we believe that the NGO sector has peaked and I will do the comparatives in a minute. Now U.S. trusted institutions over a four-year period: What you see is that business is strengthened from a low point in the summer of 2002, where it was 41 percent -- this being Enron, Anderson, et cetera -- back up to 51 percent. Government had a big spike from 9/11, dropped and has come back to that high point achieved after 9/11, which we think is significant in the United States.

Trust in media: Big spike after 9/11, continued deterioration in trust. NGOs have had a really significant rise in the United States and had plateaued at a quite high level. That's the United States. In Europe by contrast, NGOs were the leading institution by far in summer of 2001. We looked at it; it was 48 percent trust in NGOs. NGOs trust has piqued in January 2003 and declined to 41 percent today. We think that's somewhat a function of the economy. We can get into this. Gaylord may have some news from the U.N. on that later. Business in Europe has basically moved up over this four-year period. It's below the peak achieved in January 2002 however. We think that's somewhat a function of a sour economy. Also the Parmalat effect, Ahold, et cetera.

Government: An American view of government in Europe is always, "Oh, they love their governments." False. They don't love their governments much at all. Government is not much loved in Europe. In fact in most countries we surveyed it's not loved at all. You will get the data when you go out tonight.

Media has remained at a fairly low ebb, not having the 9/11 effect that was achieved in the United States. It's maintained between 20 and 30 percent or so. NGO's still are the most trusted institution in Europe. Even if they're off the peak, they are the most trusted institution.

Trust in leading corporations: We decided not just to check on the attitudes towards institutions when we asked about NGOs. We asked about NGO brands because it's a way to confirm our findings. And what we find is that trust in the United States in corporations is high. Equivalent to China and Brazil again at their sort of right end, at the highest end. However there is a significant trust discount for American brands operating in Europe. I will show you the dimension of this in a minute. And significantly, the British have the least trust of the three European countries surveyed in American companies. This shocked us.

There is no trust discount for European and Asian brands operating in the United States. In fact in many cases European companies have a higher ranking of trust in the U.S. than they have in their whole market. Further, NGO brands continue to rise in the U.S. but have dropped significantly in Europe over the last four years. We will show you that slide in a minute. However, NGOs still rank as three of the five top trusted brands in Europe.

So let's give you some sense of the dimension of the trust discount for American brands going in to Europe. What you see, for example -- and this is pretty much the same for the two years that we surveyed 2003 and 2004 -- a company like Coca Cola would have 66 percent trust in the U.S. and 40 percent in Europe. McDonald's is 53 and 27. So you get some sense of the trust gap -- whereas Bayer is pretty close. Fifty-eight percent in the U.S. Higher in the U.S. than it is at home in Europe -- at 49 percent. So the trust gap does not exist in European companies.

However, it's a very significant finding that American companies can -- and I underline can -- improve as they go into Europe if they change behavior and if they are aggressive about making partnerships in local markets. We followed four companies. We put three up on the screen. You will note that, in fact, Ford, Monsanto, and Nike have closed the trust gap significantly over the past four years. And our thesis is that, in fact, they have done some things -- specifically a policy of engagement with local partnerships with NGOs using local spokespeople.

I want to underline that. They don't bring in the great white father from the United States who comes and talks. They use local spokespeople, constant interaction with local media, and they used their local employees who are activating.

Let's look at the NGO sector here. We talked about a sort of opposite picture U.S. and Europe. In the U.S. you see a consistent improvement in NGO brand over the four years that we covered. In Europe it's going the other way. You noticed that Amnesty, for instance, Sean you can comment on this later, has gone from 73-plus in 2001 to about 63 percent this year in Europe. Greenpeace -- similar sort of retreat.

Now we also looked at trust in companies by country by origin specifically -- for instance, if you're American Express and you're headquartered in the U.S. you could be categorized as an American company, or Unilever as a U.K. company. What we found is that American companies are the least trusted in the U.K. Twenty-eight percent of Brits trust American-headquartered companies. The French are the least trusted in the U.S. No surprise. Also the German companies are the most trusted throughout Europe in the three countries we surveyed.

Now, we also wanted to add in this year a set of new statistics. We had a very strong sense -- particular coming out of the World Economic Forum last year and the sort of great contention about the War in Iraq -- that there would be an impasse of government. That was our hypothesis, and it's been more than proven in this study. We start out with sort of government-oriented questions, and you will see then we later get into questions linking government and business. So, in fact, we asked about the Blair government, the Bush administration, Schroeder, Chirac. What you find is that almost uniformly outside the United States, the Bush administration ranks lowest in terms of trust to do what is right. And that's a fact.

You can see, actually, in the United States fairly low rankings, by the way, for the French and German governments. Now, does this have an impact? Well, we asked that question. Does attitude toward government affect your interest in buying an American product? Sixty-four percent of French, 66 percent of Germans said it's less likely they will buy an American product because of the Bush administration.

So that's sort of the diagnostic. Now, let's go into what we believe is a road map to help companies build trust. We thought that it was important to try and understand the impact of global media versus local media. Whether there was, in fact, global media. And then, also, what your optimal media mix would be if you were putting together your plan. And what you find is that, by and large, television is the first media access.

We thought the Internet would be -- the Web would be the stronger player. Not the case.

However, in Brazil and in China it's very important. So in a sense maybe they're "leap frogging" in terms of the development. There are exceptions: For example, in France you still have a much greater reliance on newspapers but that's an unusual one.

Most credible information sources: If you're trying to figure out which place you really want to have the placement if you have got problems? It's actually articles in business magazines ranks highest. But just behind that -- and this is very fundamental --friends and family and colleagues. What that means is you now have to have horizontal communication. You no longer can rely exclusively on top down. So you can no longer also rely exclusively on media relations. You must do what Martha Stewart is doing and have a Web site and have a chat room and other things that one didn't have to do a couple of years ago.

The buzz: People have a web of trust that they establish each one of them by themselves. Who's your friend? What's your family saying about it? You're checking all the time because you're very skeptical about what you're hearing or seeing or reading.

Least credible information sources: This is brought to you by a PR firm so if you can put the skepticism in this if you want, but product or corporate advertising is just not trusted. It's not trusted anywhere around the world. If you have got a problem that you're in the financial services industry and you run a double truck ad and say, "Trust me. I'm from Financial--"

(BREAK IN TAPE)

Twenty percent credible except in Brazil and China. Lawyers are very credible in Europe. So those of you who are practicing here, like Peter, should go to Europe or else have someone else speak for you. Who else is not credible? PR people -- so don't go out and be like one of my competitors who goes out and he's the one who speaks for the principals. That doesn't work. You're not credible.

How does it compare to last year? The most incredible change in this is average person like yourself, in the United States 51 percent versus 22 percent last year -- the same sort of jump in Europe. This helps to explain reality TV, anyway. But the rest of them are fairly much the same as last year. Doctors, et cetera, they matter quite a bit. CEOs have had a small improvement in the United States, a small retrogression in Europe. Again, no surprise given Parmalat, etc. PR people have had no improvement. Athletes and entertainers have had small improvement. I want to explain this because one fellow in the audience with a beard is going to hit me if I don't, Peter Land . Athletes and entertainers are very important because they help you get your story across but they are not sufficient. You need to pair an athlete with an expert -- so a doctor or whatever -- then you're credible.

Corporate behavior that drives trust: A history of delivering a top quality service and listening to customers' attitudes. This is absolutely clear across all the six countries we're serving. What doesn't resonate is CSR programs or social responsibility programs. It's not bad but it doesn't turn the tide.

Final point: Most people don't keep -- when the first time that you see a story they don't believe it. They have to hear, see or read something multiple times in order to generate truth, trust. So that's why multiple information sources -- you have got to make sure you surround the person with the story. So given this finding, given these findings in the survey, what is to be done? We think that our clients have to really reexamine what they have done in communications.

Why? Because the poor image of national government -- and particularly if you're an American company-- is having a real impact on trust for you in markets outside your home market. And the attitudes toward government are unlikely to change so quickly. So we believe that companies now need to do five things.

One: You have to make your own way. You have to lead. You have to take the initiative on issues whether it's obesity, intellectual property or trade. You can't sit back and let others define you.

Second: You have to change your media mix. You have to move some money away from paid towards unpaid. You have to go through the gauntlet of the media.

Third: You cannot allow your CEO to be invisible. CEOs cannot be the sole spokesperson. You have seen that they're only 20 or 22 percent credible. However, they must not be invisible. They must exercise what Professor Joseph Nye would call soft power, which is the power of persuasion and intellectual appeal; not just hard power, which is making the numbers.

Fourth: They should ask companies that absolutely motivate and activate their employee base. This concept of building reputation story from inside out -- you have to activate your employees to do that. Word of mouth matters hugely. You saw this "average person like me" is incredibly important -- colleagues, friends and family, the buzz. Communicate constantly because people's attitudes change very quickly; notice Iowa.

And finally: This idea of peer to peer. Enable average people to communicate with each other and you will make a tremendous difference. So with that, Les do you want to opine?

Back to top

LESLIE GELB:
Sure. Thank you, Richard. Given my historical biorhythms, I don't trust anything I say before 11:00 a.m. It only gets slightly better throughout the rest of the day. Trust is a big word. Fact, it's one of the strongest words in political vocabulary. It's different from rely on, or depend on, or look to. It's a telling word. Secondly, I think what this survey is doing and will do over the next years is unique because what it tries to do is to look at media, NGOs, business, government and see how people's trust in those institutions will bear on business decisions.

These are tough links to make. And with the survey only a few years old, you have to be very cautious about making those links. Third, that said, let me try to make some links. And I make links particularly where the numbers are big, where they're overwhelming. I think the larger the numbers, the more likely you can draw some conclusions.

Now, for example, I think if you ask any tribe or any nation or any organization, if you want to buy your own stuff or somebody else's stuff, they're going to say, "I want to buy my own." But when they actually go into the store they're going to buy what they're used to buying or brand names they recognize or the like. That -- that historical phenomenon begins to waver when the numbers are large. That is -- there is bound to be some effect when 66 percent of Frenchmen say they're less likely to buy something American because of American foreign policy, and where we have similar attitudes toward France, for example.

When the numbers are up in the 60s they matter. The numbers are up in the 60s even in the 70s when it comes to general perceptions of U.S. foreign policy around the world. Now anybody who's studied American foreign policy is familiar with anti-Americanism. It's been around for a long, long time. Anybody who's as big and strong as we are is going to generate some negative feelings.

And we have historically. But there's a difference between those negative feelings in the past and the anti-Americanism of today. In the past, generally, the negative feelings were about particular American foreign policies. During the Vietnam War there was strong feeling around the world against that war. Or during the Carter administration, there was a lot of feeling -- negative feeling -- among our traditional allies about Jimmy Carter making too much of an issue about human rights, destabilizing our allies. The Reagan administration, people worried that he may be too aggressive in dealing with the Soviet Union, not concerned enough about arms control. That didn't turn out to be true at all, but you did have those strong feelings.

Now with respect to the Bush II administration, the anti-American feelings are much more generalized -- much more generalized. It concerns U.S. foreign policy almost across the board -- economic, security policy, foreign policy. So, there is more likely to be an effect on business decisions, even consumer decisions, when it's that generalized. My experience has been that in politics, the general governs the particular.

And if people begin to feel these kinds of sentiments about the United States, it will effect their decisions. As far as the media in particular are concerned, it's no surprise that people seem to trust the media only slightly more than they trust Saddam Hussein. That's the historical response. But again there's a difference between trust and rely on. I think almost everybody relies on the media more than, my guess, they responded here. You just have to -- particularly the kinds of people surveyed here, the influentials. They do rely on the media.

Trust again is another word. It's a big word. When it comes to trust, the influentials are telling us they tend to trust business magazines more than any other particular source. The media as a whole, I think, remains the key outlet for getting to the most people. It reaches the most people most of the time.

But these are the kinds of questions, I think, that will sort themselves out more over the next few years as this survey builds on its database and as we get feedback from you about how to ask better questions. Meantime, what Richard and his very able staff are doing is taking this data and trying to see what specific conclusions can be drawn for business, and what you can act on now, and things you have to think about for the future.

Back to top

MICHAEL DEAVER:
My basic feelings don't change much having read the survey. I think the survey's important because it gives us a snapshot. But the truth of the matter is that for some time we have been living in an era of impressions. And we don't go much beyond that as a people, whether we're here or whether we're in Europe or growing continually, I think, in Asia.

And what I mean by that is that we are sort of like people who are walking around with a channel selector in our brain and we are surfing constantly -- and so all of this is a series of impressions that comes to us every day. And, in fact, this survey confirms that because of the way business was thought of a year ago in this country and today, we have sort of forgotten all that and we're moving on.

And so, I think, there are some lessons from the survey and, I think, they have to do with what I'm talking about. And that is, if you agree, that we live in an era of impressions then that means that you can't say anything once. If your CEO thinks that he can make a statement, have a press conference and walk away from an issue -- he's nuts. He isn't going to be there long. Too many of our politicians have found that out, as recently as Mr. Dean in Iowa. He continued to give the impression that he had stopped thinking about two weeks ago and the rest of the world moved on in Iowa beyond him. And Mr. Kerry and Mr. Edwards were moving way ahead because they were talking about new things and Dean has stayed put. So, I thin,k you have to understand that you can't say anything once.

Secondly, you have to be in the mix continually because everybody else is. It isn't as if we have -- excuse me, Les -- just The New York Times to read any more or just the three networks in this country or just the BBC in London. We have 500 television channels available to the world, and they're going 24 hours a day. We have the Internet where people are talking continuously about you; they are determining your continuous image; they are making the impression about you. And if you don't get in there, I think, this says you're going to lose the impression that you want to build.

I think the third thing that this survey says is that there isn't one venue for you. There isn't simply buying your image -- that you have to be everywhere in these venues. You have to understand the Internet. You have to understand the trade publications. You have to -- if you are committed to and if you believe that we're in the era of impressions, then your CEOs and your management have to -- dedicate a hell of a lot more time to the impression business; as much as they do to the accounting and the marketing and everything else. Because that, in the end, is -- as we found out sadly, as American companies have found out sadly and other companies -- that effects the bottom line seriously.

And lastly, I think, what Richard said is that you have to be local. And this isn't just for American companies in Europe. It's for American companies in America. People respond to people they know. And that may be three or four separations but the closer, the less separations you can make, the better off you're going to be.

Back to top

SEAN BARRETT:
Good morning. Okay. Good morning, ladies and gentlemen. Thank you for inviting me to join you. I think there are two points that come out of this research for me. One is that there is cause for concern for business. And two, there seem to be some opportunities here.

When I say cause for concern for business, I don't think business can take real comfort from its improved result in the Trust Index. As with politicians, its improved performance this year over previous years is a result of the impact of war. People rally to the establishment in times of war, and they also squeeze those who are the voice of dissent. And therefore you get a fall in trust with NGOs and the media.

The increased support for business is a reflex action. It hasn't been earned by the performance of business. As you get into the details of research, you find there's no rationale for that support. For example, the credibility of the company CEOs is extraordinary low, with 20 percent in the U.S. and 21 percent in Europe. That's four out of five thought leaders don't trust business leaders.

My next point would be that NGOs are here to stay, and despite this year's result, their impact on business is going to become greater rather than less. While there was a slight fall in trust in NGOs in the U.S. -- down 49 to 47 percent -- and in Europe -- 45 down to 41 -- to interpret that as a peaking is wishful thinking. I know from membership data from several organizations the truth about the strength of interesting NGOs in both Europe and the U.S. And NGOs are here to remain as the fifth estate.

I was particularly interested in the section of the research on corporate standards. It was interesting to see that the result of questioning on corporate standards and the remedies being suggested in Question Seven in Section One -- there's little appetite for increased government regulation, seven percent of people in the U.S. and nine in Europe. People certainly want something done about corporate scandals, but they would still prefer self regulation. And traditionally it's been NGOs who have policed self regulation and who will continue to do so and with renewed vigor given the recent and continued performance of business, or perhaps lack of performance, one should say.

But on a positive side, I think there are some opportunities that the research points us towards. People are looking for leadership. I was interested in the implications of the tracking of the credibility of spokespersons which is Question Five. In the U.S. every category of spokesperson went up in 2004 in terms of credibility. And one interpretation of that is that people in the U.S. are looking for leadership.

The converse is true on Europe. The credibility of all spokespersons went down and an interpretation of that is that we have all been found wanting by Europeans. If you allow that trusting business has increased, I think, with that increase comes responsibility to merit that trust. And the drivers of trust, according to Question One in Section Two, shows that good corporate citizenship is highly regarded, 88 percent in America and 74 percent in Europe. And also highly rated were cause-related initiatives -- 71 percent in America and 66 in Europe. I would interpret that as there being an expectation of business that they should engage with the community on issues that the community regards as important.

But business alone based on these figures will not be able to do this. Its leaders don't have the trust or credibility, and that suggests to me that there is an opportunity for partnerships with NGOs who do have the trust and credibility. And we are in a period now where NGOs are generally more willing to engage with business and also with governments. And you can see this happening to politicians -- whatever else you say about them are quick to pick up on friends.

And here in the U.K., for example, you find that even the venerable foreign office is considering using NGOs as representatives overseas. With a major issue, such as obesity, you see the government slow to advocate personal responsibility for fear of being accused of creating a nanny state.

So what do they do? They outhouse those difficult messages to NGOs to deliver -- leaving business on the sideline. They're still trying to deal with the issue of supply and not demand. So, I think for me, this research does suggest that there is a demand for leadership from both NGOs, business and government, and perhaps the trick is that none of us have the perfect answer. The answers will be come in combination.

Thank you, Matt -- back to you.

Back to top

MATT HARRINGTON:
All right. Thank you all for a lot of thought-provoking ideas put forward. I'm going to open it up to Q & A. And, as moderator, I will take the first shot at a question -- which as I was listening -- one of the things that struck me is that it's often been said that when one loses trust of your audiences or constituencies, earning that trust back is a very long haul. And yet I'm wondering if in this era of impressions and the recovery of government and business just in the past year in terms of the findings that the prospect of earning trust back is in fact a quicker cycle and that maybe consumers are more forgiving or inclined to move on -- and whether you have any impressions? Any one of our panelists, but Mike, maybe it's the era of impressions you put forward whether that's something that companies should be thinking about as they manage crises?

Back to top

MIKE DEAVER:
I think it's true. I think you can address these issues of negative image and turn them around a lot easier than you could ten years ago because there's so much out there happening. There's so much information out there that people are going to get a snippet of if you keep saying the same thing. If you keep pounding on a new message, I think you can change negatives much quicker than you could.

Back to top

LESLIE GELB:
Let me just add a word to that. I think what Mike said is right but I would add a contextual point. I think a lot of how your impressions come across have to do with peoples' sense of friends -- whether they think things are going in a good direction or a bad direction. If you look at the numbers in this survey about business and government, for example, and think back to a year ago when they were so negative, the big change to me on both counts is not that people's qualms about particular business actions or government actions have gone away, but what has happened is that sense is that the economy is moving in the right direction. Where their foreign policy is moving in a better direction and therefore there's an up tick or two in trust because of that.

MATT HARRINGTON:
Open to questions? Yes. And we do have microphones so if you will, there we go.

Back to top

QUESTION TWO:
I’ve got a question for Richard. You came up with the NGOs that did that survey. To me that it was a full year election with certain results, you just know it skews the results. I can think of having a much lower trust level in NGOs if you put a few other organizations on that might be lesser known, or might be a lot higher if included others.

Back to top

RICHARD EDELMAN:
Nancy, we picked based on how global the brands were. In other words were they visible or present in the countries that we survey. And second, we wanted a range from human rights through environment to hunger, so we wanted to have a representation in each of those categories. Your point is, if we had picked PETA or some other group that -- People for the Ethical Treatment of Animals for those of you not aware of PETA -- you might have had a lower result is your point. Could be. Could be, but we tried to also pick sort of main stream business brands, too, to be fair.

Back to top

SEAN BARRETT:
Can I pick up on that question? I didn't hear the detail of that question, but if the general thrust of it is that by picking high profile NGOs it distorts the figures, I think that that doesn't take account of just how big the NGO movement now is. Even I was shocked last year when McKinsey did some work that was published by the Harvard Business Review, which indicated that in the year 2000 the not-for-profit sector in the U.S. had revenues of something like $700 billion. So you’re dealing with an extremely large sector here.

Back to top

LESLIE GELB:
Also, you know, in the last 25, 30 years we have gone from about 1,500 international NGOs to over 25,000 international NGOs. So they are much more prominent in every facet of life than they ever were before. Not only pressure on government and on business, but on the media too. They're a major source of information for the media.

MATT HARRINGTON:
And I suspect, to your point Les, as we watch this survey mature we're going to see the role and profile of the NGO continue to shift a great deal.

Next question? The back...

Back to top

QUESTION THREE:
My question is really for Sean, I believe, but I'm interested in what the panel has to say. You had alluded that partnerships between NGOs and businesses are a measure of a company, a business, to increase public trust. We've crossed over behind that, but I was curious to compare -- being that would seem a very transparent effort on the part of businesses to partner with NGO restores trust -- but I'm curious to hear more about that and wonder if you can speak more to the research.

MATT HARRINGTON:
And, Sean, let me repeat that in the instance that you didn't hear that quite as well.

SEAN BARRETT:
Thank you.

MATT HARRINGTON:
The question is from a guest of ours who's here from UNICEF, and she is thinking back about the comments made relative to partnerships between corporations and the NGO world and as a tool, if you will, or a vehicle to increase trust. And that that perhaps seems a bit transparent. And if you could provide some more color to the way in which those partnerships are struck and how they're viewed.

Back to top

SEAN BARRETT:
The background to that comment is that it's my belief that in this 21st century we're seeing NGOs mature from being the outsiders, they’re now becoming the insiders. They're challenging the system, yes, but they're increasingly part of the system and their focus isn't just going to be, in the future, on problems. It's also going to be on solutions where, in this century, NGOs will focus on solutions delivered through changing market systems.

And if you have a look at the data on the falling levels of trust in all institutions in Europe, for example, one interpretation of that is that people are looking now for solutions. They're not just willing to accept NGOs standing on the outside pointing out the problems. They are looking for some forms of engagement with solutions.

And what I'm not saying by that comment is that NGOs are going to roll over. The new form of campaigning that the NGOs are going to become involved with is far more sophisticated. and it's going to be about engaging to change whole market systems. And it will credit those companies that perform and still criticize those that don't.

Back to top

QUESTION FOUR:
Richard made a comment that CEOs, they have been retreating in the function of a backlash against the imperial CEO of the late nineties. Here's an alternative theory, I guess, which is that CEOs are continuing to reflect the concerns that in today's increasingly [unintelligible] environment, and feel you cannot raise your head without getting shot, and this happens if you identify yourself with one side or the other. And I was curious if you could just talk about that issue as it performs on corporations, and how it might be addressed, or just an example of that.

Back to top

RICHARD EDELMAN:
Kim, I would say that there are two good examples one could go right to -- drug pricing or obesity. If a CEO of a major food company just puts out his head of R & D or consumer affairs to talk about obesity, I think it's a terrible mistake because you know that's part of the solution but the CEO has to lead. The CEO has to inspire his employees or her employees.

CEO also has to give confidence to government regulators who are putting themselves forward and say: "Our company's committed to the following points…" Your point is risk reward. I have heard this from a CEO in China, in fact, the guy said, "Tall flowers in China get chopped off." He wants to definitely stay below the radar screen because if he's identified as a rich guy he's going to get in trouble with the government.

I don't think it's the right way to look at it -- the risk reward of just talking to the financial community. In other words talking to that narrow cast group, and just making the numbers leaves aside all these other groups, who need to be touched if you believe in a multiple stakeholder world, which I fundamentally believe in.

And that one group effects the perceptions of the other in a somewhat unpredictable way -- pinging of information around -- then you have got to affect these other stake holder groups. You have got to talk to NGOs; you’ve got to talk to the consumer directly, in fact, and have some credence, credibility with the consumer, plus the usual cast of regulators and other community leaders who you affect.

Do you have a view Mike?

Back to top

MIKE DEAVER:
Yeah. I was just going to say, I think, one of the problems has been that for too many CEOs their response frame of reference was the next earnings report -- where their next frame of reference ought to be the next five years. To say that to respond probably might be a mistake, to have a strategy to communicate is a better way to do it.

Back to top

LESLIE GELB:
Let me add two cents to this too, if I may, with my journalist hat on, ex-journalist hat on. I think it's very important for CEOs to have contact with journalists. I know there's an institution aversion to this -- going to stay away, afraid you will say the wrong thing or -- better to say nothing than say something and have it used against you.

I think the whole issue of trust with journalists is, to a good degree, dependent on that personal contact with the CEO. In the sense that the CEO can answer questions and has concerns beyond the bottom line, though the bottom line has got to be the first concern. But the CEO is familiar with what's going on in the world and has intelligent views. And I think to the extent that CEOs get out of the shell that they have been in and are willing to deal with journalists on that basis, they will serve themselves and more importantly their company very well.

Back to top

QUESTION FIVE:
Is the glass more than half empty, as opposed to the glass being a little less than half full? You could argue that the other side of trust is cynicism, and what we're seeing are gargantuan, embedded volumes of cynicism. Do you think we have got the ability to change this? Is it just a thing about our time, or is this possibly something that we can look forward to generally more—

MATT HARRINGTON:
Is it a permanent new world?

Back to top

LESLIE GELB:
Yeah. All you have to do is see any old Greek play, ancient Greek play to see that cynicism is not a modern invention. It's something felt about people toward government forever and people toward themselves and toward commerce forever. You know, whether that's worse today than it is before, I kind of think it is but it's hard to prove it.

But I think your general point's right. Cynicism is the other side of trust and these things waver considerably over the course of specific events. In other words, you have business scandals. Almost everybody, I think, is going to respond, "Hey the business community has to be watched." But over time, over time if things are going well the business community can prosper and ought to take advantage of it, of good times, good trends, to get out tough messages.

And it ought to anticipate the bad trends, which I don't think we're going to have for the next year, to do other things. I wanted to make one point about foreign policy that I didn't make before. I think this next year, talking about trends, is going to be one of the quietest years in the world. That may be the first time I have ever said something like that.

And I think the next nine months to a year that leaders in other countries will be going out of their way not to cause a ruckus with us and vice versa. I think there's a general attitude in almost every country I have had contact with abroad -- that's a lot of them --that they don't want to see Bush get reelected. Leadership.

And they don't want to do anything that they think will help his reelection chances. But, on the other hand, they think he is going to be reelected and they don't want to do anything that will make doing business with him over the next five years any more difficult. So I think we're in for a period of general quiet in the international arena.

Back to top

SEAN BARRETT:
Matt, can I just comment on that question of cynicism?

MATT HARRINGTON:
Yes.

SEAN BARRETT:
Whilst this research may indicate that there is cynicism with politicians and business, I think that that cynicism is – that the reverse side of it are the numbers of people who are engaging in civil society through the work of NGOs, that they may be discontent with politics as it currently is formulated and with business.

But there are people who are giving their money and time to join the thousands of NGOs that Lesley quite rightly alluded to earlier. So I think that we can take heart that there are thousands of people in our communities who are willing not to just become cynical. They're willing through NGOs to become active in shaping their communities.

Back to top

MIKE DEAVER:
Can I just add one point, too? And that is when you bring up Greek plays or Shakespeare, you know nothing has really changed, except the amount of information we're getting. And the bottom line still is -- I mean it was the Caesars who decided to wear purple robes to distinguish themselves from the rest of the senators who were wearing white togas; and of course it didn't do them any good, 'cause they got poisoned and their heads cut off and everything else -- but through the ages the thing that works is the guy or the company or the NGO or whoever it is who says, "I know who I am. I know where I'm going. Follow me." And it's still going to work today. It's the basic lesson of communication.

Back to top

QUESTION SIX:
Yes. My name is Carmella Vicentino and I’m with Pfizer… I work in the pharmaceutical industry and have come from Italy to be in New York.

And I know it is in America, particularly, where there is a lot of sentiment against pharmaceutical firms. You mentioned high drug prices, but actually I would love for people to understand that sometimes drug prices are high because of costs that are not easily seen. The question is really what do you have to do? Ideally, we want to gain trust to sell also more drugs. I relate to my business. No? So please address how to gain trust and why we're not gaining trust in certain categories?

MATT HARRINGTON:

Right. So the question is: How does one go about, if I can boil this down to "how does one go about improving the trust scores?"

Back to top

RICHARD EDELMAN:
I think the research gives you a road map. I think it says, "media is local." So you have got to use local spokespeople. It says that you need an array of spokespeople. You need doctors and academics, but you also need to tell the employees, so that the average people can communicate with each other. It says that you can't buy good will. You cannot do it just by advertising. You have to actually have a good product or service, and you also have to listen to the consumer and respond to problems.

It also says you have to tell people the same thing multiple times. The Mike Deaver message -- which is, "Say it; say it again; say it again in multiple venues" -– because you get this web of trust around by being transparent and by being continuously communicative on a given point. And I think it also says to you that you have to go and talk to the media.

You have to go through the gauntlet and take that chance because even if media has low regard, it's still the thing that people rely upon, as Lesley Gelb said. So it is a game plan. Okay? It needs to be customized based on industry or situation, but it gives you a direction.

MATT HARRINGTON:

Final question.

Back to top

QUESTION SEVEN:
Hi. I'd like to actually open a dialogue on two of the points that I have heard expressed and then tie it into the comment about NGOs.

The first is, Mr. Deaver, I beg to differ with you. I think that the issue is not only, not only that we have more information but I would say that the magnitude by which business is able to affect public policy has shifted. And I think that that's a large element of the distrust. It's not just that the public has more information open to them, but that they're more aware of the reach and scope of business.

And then I'd like to basically open a dialogue now with Mr. Gelb. And say that I think the issue is not necessarily that business CEOs, that prominent business leaders, necessarily need to take more of a political stand but it—

LESLEY GELB:
I didn't say that.

QUESTIONER:
Oh, I misunderstood you then.

LESLEY GELB:
I said more contact with journalists.

QUESTIONER:
Okay, so perhaps there was a comment made, I apologize, that the CEO needs to be more politically aware, that needs to be more political responsive. I think that the public perception is, in fact, that in some cases CEOs are far too politically responsive to the fact, to the point, that they are driving policy -- that there's insufficient distance between governmental policy and business. And I think that that's part of the driver of this trust.

And at that I'd like to again speak to the point that you had said that CEOs need to focus on more than the bottom line but rather focus on five years. I think that's a wonderful comment but perhaps a bit disingenuous in that we know what the drivers of business are --and it's not just the CEO off in the clouds making a decision, but a CEO responding to their board and to their investors.

So, I'm going to wrap all this together and bring in the NGO piece, which is that it's insufficient to expect a partnership with NGO to make a major inroad into this distrust unless the image of the policy maker and the businessperson are either separated, or there's a perception that the business maker is actually working toward the general good in their interference with policy, as opposed to self fulfillment of their bottom line.

MATT HARRINGTON:
Comments?

Back to top

MIKE DEAVER:
If you look at public policy and the way it's made in the United States, business does have a role. The largest expenditures of money in Washington, D.C., however, are the employees’ unions and trial lawyers and a few others. So you know, I think, the trust that we're talking about here isn't just a business. I mean there has been a diminution of trust in the Roman Catholic Church, in the schools, in unions. It's throughout and, to me, what we ought to be saying is: "How do we change that?"

And, I think, you change that by trying not to... whatever your interest is... to just go for the short goal but to look to the long term, and to have something strategic and to be credible and to be honest and believable. Those are all the things I'm talking about in communication and, I think, business has always been singled out as the culprit. And I'm not sure it's the only culprit.

Back to top

LESLIE GELB:
I'm the other "attackee" on this, but I would stand even more strongly behind what I said about the need for CEOs and other business leaders to have a wide range of contacts. It's not that they should be active politically and go out and campaign for one candidate or another. They make political statements all the time by where they put their bucks. And basically, I think, the general public perception is that big business puts its bucks with the Republican Party, so they're making that statement to begin with. I think it's there.

The way to enhance a company's credibility, brand name and the like is with the intermediaries in our society. That is the people who legitimize what you do or say -- that what you're doing is in the public interest or is not in the public interest -- I think, have all now become a greater part of business decisions. It's impossible for drug companies just to go out and sell drugs now; they have got to participate in the public debate. And they have got to be good citizens.

And I think that's true for most corporations. Now if you’ve got a lunkhead for a CEO, I'd hide him under a blanket and not bring in The New York Times correspondent. But if you’ve got a good CEO who is informed about these issues and can speak to them in a reasonable way, then you have got a better chance of getting your message and your brand and your business across.

Back to top

MATT HARRINGTON:
I think on that note, I will bring this panel to a close and want to thank each of our panelists. When I think about engendering and care taking of trust in the year ahead, I think the points have been covered here -- that it's about the careful and considerate deployment of voice, the use and value of horizontal communication, and the role and importance, continued importance, of being local. And I appreciate the comments that each of our panelists has made toward that end. Look forward to welcoming you all back next year for the 2005 Trust Barometer Survey Update, and hope to see all of you often during the course of the year.

Thanks very much.