Richard Edelman delivered this speech to the Keizai Koho Center on November 25, 2019.

Good afternoon. Thank you for inviting me to join you today. I am honored to speak once again to this esteemed organization. 

Edelman has been working successfully with leading Japanese businesses for nearly four decades—some of them are represented here today—as well as many multinationals in Japan. And over the years we have learned much about this wonderful country and its people.

One area we have learned a lot about is trust. Through our annual Edelman Trust Barometer, we survey 33,000 people around the world about their trust in four key societal institutions—business, government, media and NGOs. Every year, we learn how much people in Japan trust their institutions, and about their fears and concerns for the future. We also measure how much people in other countries trust companies headquartered in Japan.

2020 will mark the 20th year of our study. We are currently examining two decades of Trust Barometer data for a retrospective report, which we will release in January, and we are uncovering some fascinating trends. As a student of trust for two decades, I believe that trust should be of major concern for everyone in this room. Today, I will explain why.

Trust in Japan is critical at this moment, because the upcoming 2020 Olympic Games have the potential to be a game changer for Japanese business and society.

The 1964 Games were proof of Japan’s return to the global community after World War II. The 2020 Games provide a similar opportunity for the nation to reclaim its position as a dynamic and imaginative force on the world stage. After 20 years of deep sleep, the Japanese economy has rallied from a combination of economic stimulus and booming exports.

But if Japan’s businesses want to realize the greatest long-term gains from this Olympics moment, they must seize this opportunity to help improve this country’s trust, inside Japan and outside Japan.

The 2019 Edelman Trust Index shows a world out of balance. Trust levels are strong for the informed public—the blue shading. But they are abysmal for the mass population—the green shading. (The informed public are people with higher levels of education, in the top 25% of household income, and highly engaged with business news and public policy.)

Eighteen markets now have double-digit gaps in trust between these two audiences, led by the U.K., with a gap of 24 points. But this trust inequality is not just a Western phenomenon. South Korea and India have trust gaps of 17 points, and even China is now at a 12-point gap.

This disparity of trust is also prominently displayed in Japan, with a 16-point gap between the informed and mass populations. Overall, compared to the rest of the world, Japan does not fare well in trust. Japan is at the second lowest level of trust among the mass population with a Trust Index score of just 37—only in Russia are institutions less trusted.

In this volatile trust environment, corporations now find themselves in the crosshairs of social and political concerns. They are being forced to continually re-balance the interests of their stakeholders, from consumers to employees to government.

One example of this is the collision of politics, athletes and business, fueled by hyper-sensitive social media outrage. Last month, America’s National Basketball Association had to apologize for a tweet by Houston Rockets general manager Daryl Morey, who expressed support for protestors in Hong Kong. Then, in the wake of fierce criticism in the home market, NBA commissioner Adam Silver retracted the apology, reassuring the public that he supported the right of players to speak their minds on issues. That single tweet ultimately cost the Rockets $20 million in cancelled sponsorship deals in China.

These kinds of pressures on business are strong everywhere, but they are especially dangerous for businesses in Japan, where trust in business is already low. 

In the early years of the Trust Barometer, Japan’s institutions enjoyed relatively high levels of trust. But all that changed overnight with the Great Eastern Japan earthquake and Fukushima nuclear disaster in March 2011.

Following the physical tsunami, there was a trust tsunami. Facing one of its largest-ever environmental and political crises, Japan failed to deliver the leadership and protection its people needed. Dramatic 20-plus-point drops in trust in government, media and NGOs in 2012 signaled a cross-institutional failure. These three institutions have been mired in distrust ever since. Only business was able to recover quickly, and this year, business trust finally passed its 2011 trust level. 

The post-Fukushima trust crash is also borne out by another unprecedented crash in 2012: the complete collapse of the credibility of spokespeople in Japan. As you can see, there was an astonishing 58-point drop in the credibility of government officials, a 50-point drop for CEOs, and 48-point drops for academic experts and regular employees. In the aftermath of the disaster, people lost faith that anyone was telling them the truth about what had really happened.

Today, the trust picture in Japan is bleak. Among the general population, all four of the institutions we measure—business, government, media and NGOs—remain distrusted. Business and government fare somewhat better among the informed public, and there were meaningful gains among the informed public in all four institutions. We might propose that, compared to the political and upheaval in countries like the United States and the United Kingdom, and Europe’s continued fiscal woes, the informed class in Japan may believe that things aren’t so bad here.

Japan’s ineffective response to Fukushima also had a chilling effect on trust in Brand Japan in developed markets. Although “Made in Japan” has maintained consistently high trust in developing markets, developed markets have not been as welcoming.  Several business scandals that date back to the early part of this decade, at companies including Olympus, Toshiba, Takata and Kobe Steel, among others, had a long-term dampening effect on business trust. Only in the past year has Japan been able to break into the top-five trusted country brands in the West, displacing the U.K.

These trust gains for Brand Japan were driven by enormous rises in trust in Japanese companies in China—22 points—and in Russia—20 points. There were also double-digit increases in Germany, Ireland, South Africa, Italy, Hong Kong, Turkey and Malaysia. This is impressive momentum. But Japanese companies must not take this rising trust for granted. With Japan caught in the middle of U.S. President Donald Trump’s trade war with China, it remains to be seen if Japan will be able to sustain these growing levels of trust in its products and services abroad.

Back here at home, trust is part of a new set of expectations that consumers hold for brands. Seventy percent of Japanese consumers say that trusting a brand to do the right thing is a deal breaker or a deciding factor when they decide to make a purchase. Globally, the figure is 81 percent, and it’s true across all age groups, gender and income levels. In addition, 55 percent of Japanese consumers are Belief-Driven Buyers—they will buy or boycott brands based on their personal values. The message to brands is clear: If consumers don’t trust a brand, or don’t believe that it shares their values, they won’t buy it.

The 2020 Tokyo Games, then, as well as the 2025 Expo in Osaka, present pivotal opportunities for cementing trust in Japanese business and brands. If the 1964 Olympics were a statement that Japan was back as a full citizen of the world, then these two moments can demonstrate Japan’s vision of a better future for all.

During and after the Olympics, companies in Japan must step up to address the issues that the Japanese people—and people around the world—say are challenging their everyday lives. These include sustainability, the threat that automation poses for their livelihoods, and diversity and inclusion.

This past August, the Business Roundtable, an organization of prominent American CEOs, released its “Statement on the Purpose of a Corporation.” The statement makes an argument for widening a company’s fundamental purpose from a single focus—shareholders—to all stakeholders. This philosophy has long been followed here in Japan. But the statement is an extraordinary call to action: business must move to a new operating model, one that values people as much as profit.

These CEOs have committed to investing in employees, supporting communities and dealing ethically with suppliers, as well as generating long-term value for shareholders—all while delivering value to their customers. The group also states that its goal is an economy that allows each person to succeed through hard work and to lead a life of meaning and dignity.

Jamie Dimon, CEO of JP Morgan and chair of the Business Roundtable, said that the statement “is an acknowledgement that business can do more to help the average American.”

Our Trust Barometer respondents in Japan say they want CEOs in Japan to do more to help them. Sixty-four percent say that CEOs should take the lead on change and not wait for government—a rise of 11 points since last year. The global figure is 76 percent. Our respondents say that CEOs can create positive change in prejudice and discrimination, training for the jobs of tomorrow, and pay equity, among other issues.

With the eyes of the world on Japan next summer, this is the moment for Japanese corporate leaders to articulate the positive benefits their companies bring to the global society. This is the time to make public commitments and take action. This is the time to prove that your business is serving your shareholders and your society.

This shift is not only expected of your business—it is necessary to secure the future of your workforce. Employees today have a new attitude about what it means to work for a company. We asked people to rate the importance of a series of attributes of a prospective employer. What emerged is a set of employee expectations that are far broader than you might expect.

First, the fundamentals: 65 percent of employees in Japan expect employers to offer good job opportunities, including wages that keep up with the cost of living, training opportunities, career growth and interesting work.

More than half also expect a culture that is inclusive, values-driven, and empowers its employees—one where management not only keeps them informed, but also includes them in the decision-making process.

Finally, nearly half also said that they expect their work to have a positive societal impact. They want to know what their employers are doing to make the world a better place—and how their job directly contributes to this societal impact.

The global average numbers are much higher. But if even half of Japan’s workforce already carries these attitudes, we can certainly expect them to grow and spread among workers in the years ahead.

So, this Olympics year should be the year that Japanese businesses commit to building trust at home and abroad. This work begins “at home”—inside the company.

First, it is imperative that employers lead on change. For example, you can ease concerns about the impact of automation and technology on people’s long-term livelihoods by retraining current workers to be tomorrow’s productive and effective employees.

Next, employers must include and empower their employees: give them a voice, create opportunities for collaboration and empower them with information. When employees feel empowered, they become your source of building trust outside the organization.

Third, start locally by solving problems at home and improving societal conditions in the communities where your business operates. Major and multinational companies need to focus on their home communities and solve problems there.

Finally, and crucially, a company’s CEO needs to engage directly, be visible and show a personal commitment to values or a cause, inside and outside the organization. As you know, gun violence has become a terrible and tragic issue in the United States. At Edelman, we have made a commitment to advancing gun safety by partnering with an NGO that raises awareness and advocates for change.

We live in a perilous time for our societal institutions. People don’t know who to believe or what to put their faith in—they don’t know who or what to trust.  They are looking for a partner to help them navigate their lives. I believe this is the time for business to step forward and be that helpful partner. Our Trust Barometer study on brands and trust shows that if you do commit and take action, buyers will reward you with increased loyalty, advocacy and purchase. The future belongs to companies and brands that will collaborate with people on solutions to the issues they care about—and, by so doing, earn their trust.

Thank you.