The overwhelming majority of institutional investors cite “trust in the company” as the biggest driver of investment decisions, according to a global report released this week by Edelman, a public relations agency.
And in a political environment that poses business risks, according to many of those investors, building trust often means taking a political stand.
In a statement, Edelman said the new findings reflected broader concerns raised in its Trust Barometer Global Report 2017, published in January.
“For the first time, we can show that investors put trust at the front of the line when choosing stocks,” the firm’s chief executive, Richard Edelman, said in the statement.
“This new research shows that investors and the public alike are looking to business to fill the void left by the implosion of trust in government by taking a stand on the issues of our day.”
The report was based on an online quantitative survey conducted in June and July of 101 institutional investors in 14 countries that collectively manage more than $1 trillion in assets. Fifty-two percent of participants were portfolio managers, 24% chief investment officers, 13% financial analysts and 5% directors of research. Ipreo provided investor data.
The survey found that 76% of investors believed that companies have a pressing obligation to take a public stand on one or more social issues to ensure the global business environment remains healthy and robust.
Respondents most frequently pointed to education reform/training, environmental issues and free trade.
Eighty-seven percent of poll participants said customer service satisfaction affected trust, and one-third said a poor relationship between a company’s leadership and employees hurt their trust in a company.
In addition, 69% said prioritizing employee commitment was a way for a company to build trust.
Recent research on customers’ opinions about major U.S. bank brands found Wells Fargo the least-trusted bank following its fake-account opening scandal.
About half of institutional investors in the Edelman report believed that their company’s actions could meaningfully influence a company’s corporate governance.