2012 was the annus horribilis for Trust in Europe. The very survival of Monnet and Schuman’s supranational construction came into question. The Euro was in terminal decline, Greece teetered on default and exit from the Euro, and the institutions of the EU seemed incapable of managing the currency crisis and subsequent sovereign debt nightmare as taxpayers were saddled with the bill for profligate banks. A veritable perfect storm for trust.
Move on one year and the European data shows some signs of a recovery or reset from collapse the previous year and from the dark days of the financial crisis of 2008. However, while there are green shoots, it’s too early to be predicting a bumper harvest for European trust.
The global trust story highlights an interesting paradox for business. We trust business more than government, but we see a void of leadership in business. Business has a licence to lead but errant behaviours and wrong incentives seem to indicate that big business is unwilling or culturally incapable of going beyond self-interest to benefit society at large.
So where does that leave us in Europe? Well, firstly while we are seeing trust recover there is a new normal and that’s around a Europe of two halves. While the majority of citizens believe Europe is on the wrong track, a divide between the financially autonomous and the EU managed economies is emerging. It’s no surprise that Spain, Ireland and Italy all distrust the German Government to do the right thing when it comes to managing the debt crisis. The UK, France, Netherlands and the rest of the EU countries have faith in Berlin. Here’s a funny thing: when it comes to sorting the currency crisis, Britons trust the German Government more than Germans do. Who would ever have thought that day would come? Overall, five out of nine EU countries trust the EU more than their national governments to work through this crisis. Not a ringing endorsement for a wave of new administrations that came to power over the last two years.
Where does the failure of Government to lead leave business? Well, there are some interesting insights. When we consider what countries we trust as headquarter locations for enterprise, we really are giving a view on our perceptions of a particular country as a brand. In Europe, it’s good news. Germany, France, Netherlands, the UK and to a lesser extent Italy and Spain all get a strong trust premium. Perhaps those countries have an opportunity to leverage this in their developing relationships with emerging markets where domestic businesses are less trusted.
It’s an established fact that economic well-being has a positive Trust impact. German unemployment is dropping, the DAX is up and so is Trust. In France, on the back of an election, trust is also up and in the UK the Jubilee celebrations and Olympics generated a feel good bounce for trust. But real societal problems remain. Business in general has not been seen to create jobs or behave ethically. As big businesses sit on bloated balance sheets and fail to invest cash to create growth and jobs, a growing Europe-wide resentment is building. This is particularly true of 18-30-year-olds where hope is beginning to give way to despair. As growing resentment builds, it’s a salutary lesson for business. Enterprise has to do more for youth unemployment.
Perhaps Monnet and Schuman’s vision of European countries considering the greater good rather than prioritizing national self-interests is instructive for business leaders in Europe. Business must look beyond the bottom line and identify what role it can play for the greater good of European society. Good financial performance and operational excellence are now expected as a given. Transparency, the tackling of societal issues, ethical action and the prioritisation of workers and customers beyond simple profit are the behaviours now expected to build trust. Business cannot afford in trust terms to make decisions solely within the boundaries of its legal or regulatory requirements, but on the principle of what is morally the right thing to do.
With European citizens, devoid of institutions which they can trust, the opportunity for business has never been greater. It can only be realised by a radical reset which means European business understanding that its role should be both to impact positively on society, while looking after its own bottom line, its own employees and its own customers.
Mark Cahalane is European chair of Edelman’s Corporate practice.