Executives across the world increasingly see corporate governance as key to creating trust with shareholders, with 61% planning to prioritise environmental, social and governance (ESG) strategies within three years, a recent study found.
A Board Frontier Topic survey by London-based consultancy Deloitte found 94% of global business leaders recognise the importance of building trust within their organisation. Yet only 39% of the executives surveyed indicated their organisations have achieved a high level of trust maturity, with around one-third lacking a consistent approach to maintaining trust.
"For businesses, earning and protecting stakeholder trust is fundamental to ongoing viability and success, not only in terms of reputation, but also as an important driver of financial performance," said Michael Bondar, Deloitte's global enterprise trust leader.
The level of trust between each respondent's organisation and stakeholders has a high impact on aspects of companies' operations such as financial performance (66%) and market value (60%), according to the study, which surveyed 177 directors and corporate executives across 30 geographies.
Some 67% of respondents said the main focus for building trust with stakeholders over the past 18 months was overcoming Covid-19-related challenges. However, that agenda rapidly shifted to ESG matters, which are more likely to affect corporate trust building as the pandemic becomes less of a concern in many regions.
Deloitte's report found 45% of respondents said ESG is a main driver of trust for their company at present, rising to 61% in terms of priorities in three years, as they see ESG and climate change becoming even higher priorities than customer experience (52%), innovation (50%) and cybersecurity (49%).
"Unquestionably, boards in Southeast Asia recognise the importance of ESG considerations in securing their organisation's social licence to operate," said Seah Gek Choo, boardroom programme leader at Deloitte Southeast Asia.
"However, of the three components, they are most familiar and comfortable navigating dimensions relating to governance, with the environmental and social components being much less understood."