AI-generated summary
Trust in institutions and companies is currently in crisis, a situation worsened by the pandemic which has exposed systemic societal failures. However, trust remains essential for the effective functioning of businesses, influencing both customer loyalty and investor decisions. The report “Trust in the Digital Age” explores this challenge and highlights the critical role of Environmental, Social, and Governance (ESG) criteria in rebuilding trust. ESG factors reflect a company’s commitment to sustainable and ethical practices beyond mere profit, which is increasingly valued by consumers and investors alike.
ESG criteria are vital for regaining trust because they demonstrate a company’s dedication to social and environmental responsibilities. Surveys show that 87% of consumers expect companies to integrate environmental concerns more deeply into their operations, and 71% would lose trust if a brand prioritizes profits over people. For investors, ESG is also crucial: over 90% prioritize these criteria when choosing investments, and ESG-related assets reached $17.11 trillion in 2020, accounting for a third of professionally managed U.S. funds. Embracing ESG principles supports a shift to stakeholder capitalism, where long-term value is created by addressing the needs of all stakeholders, thereby fostering trust and sustainable growth.
If a company wants to have the trust of its customers and society, it needs to include environmental, social and good governance criteria in its strategy.
Trust in institutions and companies is in crisis. The pandemic exacerbates this loss of confidence, by highlighting the systemic failures of our society. At the same time, trust is a key element for the smooth running of companies, both from the point of view of customers and investors.
In our report “Trust in the Digital Age”, we address this problem and point out solutions. Today we look at the role that ESG plays in trust: why are they important? How do they influence consumers and investors? What kind of actions are necessary to make ESG criteria visible and generate trust?
Why are ESG criteria important to regain trust?
The trust we have in a company depends a lot on whether it serves social and environmental purposes:
- For 87% of consumers, companies should integrate environmental concerns into their products, services and operations to a greater extent than in the past.
- 71% of consumers would lose trust in a brand if they perceive that it is putting profits ahead of people.
ESG criteria (Environmental, Social and Governance) are precisely those that guarantee a sustainable purpose beyond profits.
According to Christoph Steck, Director of Public Policy and Internet at Telefónica and an expert at our Foundation, in order to regenerate trust it is imperative to move towards stakeholder capitalism, i.e. a new type of capitalism in which companies seek to create long-term value taking into account the needs of all their stakeholders and society in general.
The importance of trust and ESG criteria for clients
For consumers, the importance of trust in a brand or a company when deciding on a purchase has become crucial. As we can see in the following figure, it is in third position as a purchasing criterion, only behind the value/price ratio and the quality it offers. In addition, it should be noted that the fourth criterion, “Has a good reputation”, is also linked to trust.
The importance of trust and ESG criteria for investorsFrom an investor point of view, it is also a key factor to consider: more than 90% of investors say that ESG criteria are a priority when seeking new investments and 88% of them want companies in which they already have investments to prioritize ESG. ESG investing now accounts for one-third of total U.S. assets under professional fund management, reaching $17.11 trillion in 2020.
If you want to delve deeper into the current situation of trust in institutions and what kind of solutions are being proposed to recover it, you can read our report “Trust in the digital age”.
Director de Impacto Social y Sostenibilidad en Edelman
