Industry reputations rise and fall, but understanding and managing risk can help public companies weather the shifting winds.


BY DOUGLAS G. PINKHAM , PRESIDENT, PUBLIC AFFAIRS COUNCIL R


eputation management is not about achieving a high search engine optimization (SEO) score. It’s also not about keeping one’s head


down until the storm passes or trying to spin serious controversies into positive news. Reputation management involves taking a sys-


tematic and proactive approach to influencing one’s image, brand perception or standing among stake- holders. While reputation is an intangible asset, it can create value by increasing customer loyalty, creating business opportunities, attracting investors, making employees happier, helping the recruitment process and lowering management costs. When facing crises and controversies, a positive


reputation can also gain a company the benefit of the doubt. And yet, despite a strong American economy,


corporate reputation risk in the United States may be higher now than at any point since the global financial crisis of 2007-2009. Tat’s the result of not only increasing disinformation, but also rising anti- business attitudes and political risk. It’s useful to examine which industries have im-


proved or worsened their reputations over the past decade. But before we do that, let’s scan overall public attitudes about business trust and favorability. Te Edelman Trust Barometer study always draws


significant attention when it is released each Janu- ary. Te 2024 edition shows that across 32 countries, business is trusted by a remarkable 63% of the public, ahead of NGOs (59%), government (51%) and the media (50%). It’s important to note, however, that three major


authoritarian regimes — China, Saudi Arabia and the United Arab Emirates — account for three of the five countries with the highest trust in business, and their scores (around 80%) lift the average. In the United States, meanwhile, only 53% say they trust business.


niri.org/ irupdate According to the 2023 Public Affairs Pulse survey,


an annual poll conducted by the Public Affairs Council and Morning Consult, only half (50%) of Americans have a somewhat or very favorable opinion of major companies. Pulse survey results show that Americans believe


major companies do a good job in certain functions. Tese include providing useful products and services (60% good; 18% poor), serving their customers (53% good; 23% poor), creating jobs (50% good; 25% poor) and serving their stockholders (47% good; 18% poor). On the downside, major companies are most often


criticized for how they manage executive compensa- tion (26% good; 44% poor), protect the environment (31% good; 37% poor), and support local communities (34% good; 34% poor). Earlier I mentioned that growth in corporate


political risk has served to increase reputation risk. Each of these risks can affect the other. Years ago, as the Council was preparing its report on the latest Pulse survey, we discovered an interesting way to illustrate the correlation between reputation risk and political risk. Each fall the Council surveys 2,200 Americans


to find out, among other things, which industry sec- tors are considered the most distrusted and which ones are most in need of further regulation. In our methodology, we intentionally ask whether a sector is more trustworthy than average, less trustworthy, or about average. Tis approach forces respondents to rank each type of company in comparison to others. Ten we ask about regulation. Is a given sector


under-regulated, over-regulated, or regulated the proper amount? Figure 1 and Figure 2 show sector-by-sector scores


ranked by levels of distrust and under-regulation. Te figures show a remarkable correlation between


a sector’s level of distrust and the public’s willingness to further regulate that sector. Te most distrusted


IR UPDAT E ■ SPRING 2 0 24 19


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