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Public trust in business shrivels in recession – but consumers hold steady on ethical commitments

As the UK officially falls into recession, a new report ‘What Assures Consumers in an Economic Downturn: Reviewing the agenda in the global economic crisis’ from the think-tank AccountAbility investigates what enables consumers to trust in a business’s integrity and fairness.

Consumers see huge “accountability gap” between those responsible for business ethics and their ability to deliver
Six in ten people see industry regulators as responsible for ensuring businesses behave ethically, but only two in ten think the regulators are up to the job. Over half the public (56%) say businesses themselves must be accountable for their own behaviour, but only 6% of people trust them to do so.

Consumer watchdogs are the only institutions with a positive “accountability gap” – the difference between responsibility to act and trust to deliver. Two thirds of the public (65%) think consumer bodies can do the job they are entrusted with.
“This ‘accountability gap’ – the gulf between responsibility to act and capability to deliver – poses a huge problem as the recession tightens its grip”, says Alex MacGillivray of AccountAbility. “Consumers are sticking to their ethics but feel let down. Businesses are desperate for new ways to rebuild trust. Government sees the need for game changing policies. But collectively, the proposals on how to do this are well short of what is needed. Rebuilding assurance is the missing piece of the recovery plans.”

Low consumer trust in PLCs while co-operatives prove trustworthy
Nearly one third (30%) of UK consumers always make an effort to buy products and services from businesses that behave responsibly, and spending based on labels including energy efficiency, and sustainable fishing, looks set to increase. When measuring which organisations consumers trust, the research found that PLCs, shareholders and trade bodies registered the lowest trust. By contrast, consumer watchdogs, NGOs and co-operatives registered the highest levels of trust.
“What consumers seem to be saying to business is that if corporate responsibility mattered in good times then it should matter in tougher times. Businesses should, therefore, not think that they can hope to rebuild consumer trust by turning on and off the ‘corporate responsibility tap”, says Barry Clavin, Ethical Policies Manager at The Co-operative.

Public demands independent assurance
Consumers look to independent channels of information about business performance. They overwhelmingly prefer channels such as consumer watchdogs, the media and third party assurance labels, rather than information produced by businesses themselves. This suggests a major reorientation of corporate communication and engagement strategies, and a policy of zero tolerance on overstated claims and greenwash.

“Independent assurance helps organisations protect their brand integrity, which the latest What Assures Consumers? Report has highlighted as a major issue for consumers. It also helps them demonstrate that they have addressed the concerns of their stakeholders and are in control of their business’s critical issues.” Sandy Sutherland, LRQA

The report shows that the economic downturn is an opportunity for those companies that can ensure their accountability is embedded in their business model. Ethical companies can increase value and trust in consumers by building sustainability into products and services.

Other key findings from the report include:

  • 30% of consumers feel they can influence the way a business behaves through their purchasing decisions, and 45% are still prepared to boycott products made by companies they do not trust.
  • 73% of consumers believe fair treatment of employees and suppliers are the priorities for what makes a responsible business
  • +55 year olds are more likely to make an effort to buy responsible products and are more likely to think that consumers have a personal responsibility to ensure business behaves well. Under 25s are demanding that watchdogs take a more aggressive role in driving up standards.
  • The recommendations from this report will be relevant beyond the UK as other countries come to terms with the impact of the downturn on their own economy, consumers and responsible business practices. In particular, policy-makers will need to strengthen transparency and regulation and businesses will be able to assure consumers through sound sustainability strategies and delivery, and confident communications.

    The research is freely available online here: www.accountability21.net/whatassures