Expectations for corporate transparency are evolving in the context of rapidly changing technology and consumer expectations.
Exploring the changing dynamics of corporate transparency, SC Johnson and GlobeScan partnered to engage more than thirty global thought leaders to get their perspectives on the future of corporate transparency and why it matters. The thought leaders were chosen because of their contributions and influence in the area of transparency, representing a wide variety of backgrounds in the corporate, NGO, academic, media and government sectors from different parts of the world. Insights from these conversations were presented in the just-released white paper “Building Trust: Why Transparency Must Be Part of the Equation.”
“Building Trust” identifies seven critical insights around the dynamics and future of corporate transparency, especially as it relates to increasing trust in business at a time when this is sorely lacking.
1. Transparency builds trust
With trust in companies and government particularly low at a time when these institutions are the most needed to help create a more inclusive and sustainable future, it is becoming increasingly important for companies to learn how to be more open and honest to re-build trust. Transparency is one of the most powerful tools that companies have to build trust among their stakeholders, and by sharing both the good and the bad they can create deeper connections and social capital with consumers and stakeholders.
2. Transparency is about leadership
As re-building trust in business is essential to create a more inclusive and sustainable economy, corporate leaders need the courage to commit to and advocate for transparency. There is a critical need, and great opportunities, for leadership around corporate transparency. Companies that work with industry, NGOs, academia, governments and consumers can lead on creating new standards of openness and honesty that other companies can learn from, aspire to and work toward.
3. Transparency is evolving
Transparency will continue to be redefined as society’s standards for corporate transparency are evolving at a fast pace. Rapidly changing standards will be driven by increasingly empowered stakeholders and consumers and by disruptive technological innovation that makes information cheaper and more accessible, but also by the increasing value and fragility of brand and reputation. Most thought leaders interviewed for this paper believe that corporate transparency will become increasingly important as we move forward.
4. Transparency enables stakeholders, such as consumers or NGOs, to hold companies accountable
As standards for corporate transparency are expected to increase, so too will stakeholders’ ability to hold companies responsible for their actions. Given the high public trust in academia and NGOs, we expect these organizations to be influential in shaping the definition of good corporate practice. Increased public scrutiny will likely push companies toward more responsible behavior, benefiting consumers and society at large.
5. Transparency enables companies to shape their own narrative
However, if a company does make a mistake or faces a challenge that could be potentially damaging to its reputation, it pays to be open and honest. By telling the story themselves companies can sometimes get ahead of detrimental information and may also be able to strengthen their connections with stakeholders or consumers by showing the courage to expose their less flattering aspects. Companies will increasingly have to understand this dynamic in order to survive in a world where nothing can be hidden.
6. Transparency means a change in corporate culture
One of the most challenging aspects of increasing corporate transparency is to replace a culture of secrecy with one of openness. The thought leaders interviewed agreed that the pathway toward increased transparency is mostly cultural, and some pointed to the importance of the right leadership to be able to embrace new demands for openness and shared value that may clash with a more traditional business culture of strongly prioritizing market gains.
7. Transparency is increasingly being driven by consumers
Consumers increasingly demand that the products that they buy are healthy and safe with less negative environmental and social impact. As it becomes impossible for companies to hold back information, it will instead become more important for companies to proactively engage consumers around these issues. Consumer expectations for more openness and honesty are likely to continue to drive corporate transparency, as consumers are increasingly empowered by technology that makes accessing and sharing information ever more easy and instantaneous. According to GlobeScan’s 2017 Radar, a global public opinion study, three-quarters of consumers worldwide expect companies to provide full transparency on their products and services.
Understanding these key dynamics of how corporate transparency is changing may help companies to go beyond what they are already doing and move towards setting new standards of openness and honesty, something that will greatly benefit society at large.