The

Bottom Line
on Trust

Accenture Strategy
 In the not-too-distant past, trust was
considered a “soft” corporate issue.
Its connection to a company’s value
was always there, but unclear. Not
anymore. New Accenture Strategy
research quantifies the impact of trust
on your company’s competitiveness.
And bottom line.

Trust is anything but soft.

The bottom line on trust | Accenture Strategy 2

About the authors

Rachel Barton Chris Roark

Managing Director Senior Managing Director
Accenture Strategy Accenture Strategy
Europe Lead North America Lead
Rachel leads Accenture Strategy in Europe. She advises business leaders Chris Roark is the North America lead for Accenture Strategy and a
on how they can transform and create new growth. Rachel has developed thought leader on enterprise transformation and managing through
transformation strategies to support the reinvention of some of the most disruption. He works with management teams and their boards of directors
well-known global brands. With a passion for social responsibility, she also to drive enterprise value through innovative growth strategies, operating
sits on Accenture’s global Corporate Citizenship Council. Rachel is based model designs and structural cost resets. Chris is based in Chicago.
in London.

Masataka Ishikawa Bill Theofilou

Managing Director Senior Managing Director
Accenture Strategy & Consulting Accenture Strategy
Strategy Lead, Japan CEO & Enterprise Strategy Global Lead
Masataka leads Accenture Strategy Japan. He advises C-suite leaders Bill focuses on helping CEOs become more competitive by addressing
in multiple industries on why, what and how they can transform their their company’s growth and cost challenges concurrently. Bill has more
businesses for growth and brings clients expertise in M&A, cost than 20 years of experience restructuring companies for profitable growth,
optimization, operating model design and digital strategy development. developing new go-to-market models and growth strategies, and aligning
Masataka is based in Tokyo. organizational and cost structures to support strategy. He is based
in Boston.

Kevin Quiring
Managing Director
Accenture Strategy
North America Customer Sales & Service Lead
Kevin advises organizations across a variety of industries in the design
and development of customer strategies and leads initiatives focused
on driving profitable growth through customer acquisition, development
and retention. He is based in Minneapolis.

The bottom line on trust | Accenture Strategy 3

The topic of “trust” is everywhere. We are trust-ranked as individuals
and as corporate entities—from social media to career websites.
China will assign each of its citizens a “trust score” as part of its
Social Credit System by 2020.i Even our devices are now assigned
trust scores.ii Businesses worldwide are taking note, with some
companies including trust measures in executive compensation
packages.iii Combine that with headlines on everything from tainted
food, to consumer data breaches, to cyber and fraud incidents—
and it becomes clear that trust is center stage.

In today’s world, it is no longer a question of companies on the Accenture

of if a company will experience a trust Strategy Competitive Agility Index
incident, but when. experienced a material drop in

54%
trust and conservatively lost out on

US$180B
Adding to the intensity, trust incidents are becoming increasingly
visible to the general public. The heightened transparency inherent
in our digital world means trust is a highly flammable, ever-present
concern. Managing trust cannot be relegated to simply addressing
individual incidents with public relations as necessary. Instead,
companies need to intentionally create a culture that builds,
maintains and preserves trust. They must bake trust into their DNA,
in revenue
strategy, and day-to-day operations. In this age of transparency, how
a company does things has become as equally important as what it
does. Trust must permeate relationships with all stakeholders—from
employees, to customers, suppliers, investors, analysts and the media.
To be competitive in today’s environment, companies need to execute
a balanced strategy that prioritizes trust at the same level as growth
and profitability. Those who do benefit from greater resiliency from
trust incidents, making them more competitive. Those who don’t are
putting billions in future revenue at risk

The bottom line on trust | Accenture Strategy 4

Revenue at risk

The Accenture Strategy Competitive Agility Index quantifies the

impact of trust on a company’s bottom line. We scored more
than 7,000 companies across three interdependent dimensions
of competitiveness: growth, profitability, and sustainability and
trust. Our 2018 analysis revealed that more than half (54 percent)
of the companies we examined experienced a material drop in
trust at some point during the past two and a half years.
The average company that experienced a drop in trust also saw
A US$30B retail company
their Competitive Agility Index score decline by two points.iv For
every point a company’s score on the Competitive Agility Index
experiencing a material
drop in trust stands to lose

US$4B
drops, significant revenues are at stake. Across the 54 percent
of companies in our sample that experienced a drop in trust,
revenues at stake conservatively equate to at least US$180 billion,
based on available data.v
As the threat and visibility of trust incidents continues to
increase for businesses around the globe, we now see just
how much those incidents are putting companies’ revenues
at risk. Although the decline in percentage varies by industry,
all industries share a material risk. For example, a US$30 billion
retail company experiencing a material drop in trust stands to
lose US$4 billion in future revenue. in future revenue.
The numbers speak for themselves. Trust—as it relates to
competitiveness—is so important to a company’s bottom line
that C-suite leaders downplay it at their own risk. The ability to
manage and measure trust as part of your company’s strategy
has become a key competitive advantage.

The bottom line on trust | Accenture Strategy 5

What is the Competitive Agility Index?

The Competitive Agility Index is a measure of a company’s We base measurement on how effectively their strategy using more than 4 million data points from the past
competitiveness developed by Accenture Strategy to balances results across the dimensions of growth, two and a half years.
measure the value of an interdependent strategy targeting profitability, and sustainability and trust. The Competitive
growth, profitability, and sustainability and trust. Our Agility Index relies on publicly available data (including The methodology, powered by Arabesque S-Ray®,
analysis shows that companies can no longer rely solely historical and future consensus data), as well as innovative focuses on the relationship between not only revenue
on traditional or historical gauges like market cap and total sustainability and trust measurements. Accenture Strategy and profitability, but also connects sustainability
shareholder return to paint the full picture of their future uses this data to calculate a score to help companies and trust as equal factors that influence how well a
competitiveness. quantify their competitiveness. company is poised to compete. Growth, profitability,
and sustainability and trust each comprise equal thirds
Accenture Strategy uses proprietary data to assess and Accenture Strategy calculated index scores for 7,030 within the Competitive Agility Index.
measure each company’s competitiveness versus peers. companies across 20 sectors and 127 discrete industries

Growth Profitability Sustainability Companies by Geography

and trust
APAC
NA 2,323

33%
Our growth segment looks
33%
To measure profitability, we
33%
Our sustainability and trust
2,858
EALA
1,849
at both year-over-over combine multi-year views of segment takes a quantitative
enterprise value growth return on invested capital, view of environmental, social,
and revenue growth net debt and EBITDA margin. and governance factors;
United Nations Global Compact
principles; and a proprietary more than
measure of trust based on
publicly available data.
7,030 20 4 million
companies industry sectors data points

The bottom line on trust | Accenture Strategy 6

Trust in an era
of transparency
Stakeholders—from investors to customers—are focused on
corporate behavior like never before as companies operate
under the public eye, in an era of unprecedented risk and
transparency. Ubiquitous social media makes trust part of the
mainstream conversation with all stakeholders. A company’s
behaviors and actions have an immediate impact on reputation
because they can now be shared virally, universally—and instantly.
Accenture Strategy defines trust as a consistent experience of
competence, integrity, honesty, transparency, commitment,
purpose and familiarity. Trust not only defines the quality and
sustainability of a company’s relationships with its stakeholders,
it builds shared value.
We view a trust incident as any event or circumstance that
results in the loss of real or perceived trust in a company. The
Competitive Agility Index measures this from the perspective
of six stakeholder groups: employees, customers, suppliers,
media, analysts and investors.

The bottom line on trust | Accenture Strategy 7

Who has a stake in trust?

Traditionally, a company’s view on trust was that to match its values—and are more likely to switch The opinions of the general public also impact trust,
it mattered only in its downside impacts. Today, employers if they see a disconnect. The workforce which play out in real time across all forms of media.
enterprises are prioritizing new paths to help of the future wants to empathize with and represent Businesses need to have an omnichannel view across
accelerate growth. Our analysis shows accessing their employer’s business values. When that occurs, social media sentiment; online product and company
this growth is increasingly reliant on trust. Because it ultimately enhances engagement and productivity. reviews; print, digital and broadcast media coverage;
of this, companies must carefully consider all In recent Accenture Strategy research, more than and emerging media channels to stringently manage
stakeholders’ perspectives. one-third of workers surveyed ranked reputation and influence perceptions and to limit the damage
as a top-three motivation to work for their that negative viral sentiment can cause.
Today’s customers have more choices than ever. current employer.vii
They are looking to affirm their own values when Without credit in the market and consequent funding,
choosing companies with which to interact. Suppliers and trusted partners are key players in most businesses cannot enable their license to grow
When product and service quality live up to today’s business value chain. They enable faster and general competitiveness. Analysts and investors
brand promise, companies create better customer innovation cycles with more flexibility. Recent are interested in a broader perspective of business
experiences, improving their reputational value Accenture Strategy research points out that trust, including not only financial performance, but
and trust. Companies that cannot deliver on brand 84 percent of supply chain executives say they extra-financial performance (i.e., environmental,
promise or transparency will lose customer trust will increasingly use distributed manufacturing social-impact metrics). For example, a joint report
and consequently, business. A recent Accenture networks (more third parties) to meet customer developed with the United Nations Global Compact
Strategy study of 25,000 global consumers found demands.viii At the same time, global supply chains found that 88 percent of investors see sustainability
that, of customers who switched companies in the are increasingly forcing companies to develop a as a route to competitive advantage.ix Companies
past year, 46 percent did so because they lost trust much deeper understanding of product origins need to meet this increasing demand for sustainable
in the company.vi And switching isn’t the total cost. and supply chain risks. Regulators are tightening investments and extra-financial transparency to
Customers are willing to speak up, organize and the rules in areas like workers’ rights, genetically retain analyst and investor trust.
boycott when their expectations aren’t met. modified organisms and deforestation. They also
are challenging the limits of trust and responsibility
Employee trust is crucial in the war for talent as as culpability is extended throughout an ecosystem.
a company’s reputation and actions become
more important to job seekers. Employees, more
than ever, look for a company’s everyday actions

The bottom line on trust | Accenture Strategy 8

Bottom line impact of trust

It’s clear that trust has become material. If we

define “material” as anything that could change
the perceived value of a company, trust is now B2C company B2B company
a bona fide poster child for materiality. Trust
declined in 10 of 15 industry sectors in 2017,x CAI score Revenue EBITDA CAI score Revenue EBITDA
signaling that companies must better position 2016 2016 2016 2016 2016 2016
themselves for resiliency from trust incidents.
Companies with a higher Competitive Agility
51.4 $16.0B $3.4B 47.6 $2.8B $1.2B
Index score, however, are more resilient when -1.4% -2.4% -4.1% -5.6% -33.6% -60.7%
2017 2017 2017 2017 2017 2017
their trust score drops—seeing less of an
overall impact on competitiveness. 50.7 $15.6B $3.2B 45.0 $1.8B $0.5B
Let’s look at a couple of real-world examples
to see the relationship between trust and

US$400M US$1B
bottom-line-driven competitiveness.

loss in revenue loss in revenue

A B2C company launched a sustainability-oriented A B2B company was named in money laundering
publicity event that backfired when they failed to allegations. Its trust score dropped nine percent
consult with environmental experts, breaking trust in just one quarter. Revenue in the following year
with their stakeholders. The resulting negative viral then dropped almost 34 percent or US$1 billion,
publicity caused its trust score to drop by eight with EBITDA diving almost 61 percent, or by
percent in one quarter. Its Competitive Agility Index US$700 million.
score for the year then declined 1.4 percent. Revenue
declined by US$400 million, while EBITDA dropped
US$200 million.

The bottom line on trust | Accenture Strategy 9

When we compared companies that experienced a trust drop to those that did not, we saw a trend. Those that
had a drop in trust saw their Competitive Agility Index scores decrease more than those that did not. While trust
accounts for a fraction of a company’s total score, it disproportionately impacts revenue and EBITDA.

Trust disproportionately affects a company’s

Competitive Agility Index score and bottom line
33% 33%
Growth Sustainability & Trust

Competitive
Agility Index

33%
Profitability

The bottom line on trust | Accenture Strategy 10

 While the average percentage varies by industry, when a drop in trust occurs, companies in all industries will
experience a material decline in both revenue and EBITDA.xi We’ve highlighted select industries in the following
two graphs.

Potential impact on revenue growth

from a 2-point drop in index score
Software, Consumer
Industrial Global Electronics & Travel & Platforms, Goods &
Banking Retail Services Utilities Average High-Tech Transportation Services Energy Communications Services Insurance Media Manufacturing
0
Revenue Growth

-2.2% -1.3%
-3.3% -3.1% -3.0% -2.9% -2.6%
-5
-4.6% -4.4%
-6.0% -5.8%
-10 -9.3%

-15 -13.0%

-20

-21.8%
-25

Note: Global Average includes other sectors not listed here.

The bottom line on trust | Accenture Strategy 11

 Potential impact on EBITDA growth from a 2-point
drop in the Competitive Agility Index score
Consumer Software,
Industrial Electronics & Travel & Goods & Global Platforms,
Services High-Tech Transportation Services Energy Communications Average Media Services Retail Utilities Manufacturing Insurance
0
EBIDTA Growth

-3.0%
-5 -3.9%

-8.0% -7.6%
-10
-9.4% -8.8%
-10.2% -10.0% -9.8%
-11.8%
-15 -13.4%
-14.8%
-16.2%
-20

Note: Global Average includes other sectors not listed here.

Note: Global Average includes other sectors not listed here.

The bottom line on trust | Accenture Strategy 12

Minding your bottom line

Know where you stand. Trust is the furthest thing from a “soft” corporate
issue. It’s part of an interdependent strategy
The only way to know where your company stands that significantly influences your bottom line
is to measure it—to bring science to the table. Whether and competitiveness. Knowing how much is at
it’s our Competitive Agility Index or another solid stake for your company—taking trust and your
Despite a company’s best measure, measure you must. That’s the first step.
If you can’t measure it, you can’t manage it.
competitiveness to a forensic level—is becoming
the new normal.
efforts, it is impossible to Behaviors and actions must match stated values,
prevent trust incidents Make trust part of your in the eyes of all major stakeholders—employees,
cultural bedrock. customers, suppliers, investors, media and
completely. However, Your leadership team must embrace trust as a core
analysts. As our research shows, mishandling
companies can prepare— element of business strategy. All teams—at every
trust can negatively and substantially impact
growth and profitability.
by having a strategy level—must walk the talk. The choices they make
every day need to support trust as a key element The bottom line on trust? It’s intrinsically tied to
that balances growth, of their corporate business strategy. your bottom line. If your company wants to claim
true competitiveness, trust must be a critical
profitability, sustainability Elevate trust’s role in your input and output to your company’s strategy.
and trust. And when an overall strategy.
incident does strike, the Some companies make choices to deliver near-
Reach out to our authors to
balanced strategy helps term cost savings and profit improvement without
considering how they might jeopardize trust. In the see how trust impacts your
minimize its impact. mid- and long-term, companies need trust across
the stakeholder map to access avenues to growth.
company’s bottom line.
From adjacent areas of business to new markets,
trust matters. Without the support of all stakeholder
groups, your company will face an insurmountable
growth disadvantage versus competitors

The bottom line on trust | Accenture Strategy 13

 Contributors
Brian Eggers
Ana Paula Mundim
Geoffrey Nolting
Haralds Robeznieks

References
i. USA Today, “What’s your citizen ‘trust score’? China moves to rate its 1.3 billion citizens”, November 10, 2017
ii. Business Insider, “Apple will log about how many ‘phone calls or emails you send and receive’ to give your device a
‘trust score’”, September 19, 2018
iii. MM&M, “Novartis revises bonus structure to promote ethical behavior”, September 21, 2018
iv. A material drop in trust is defined as a drop of 5% or more
v. Revenues at stake were calculated conservatively at US$180B for the 900 companies in our sample that experienced
a drop in trust and for which year-over-year financial data and Competitive Agility Index scores were available.
vi. Accenture Strategy 2017 Global Pulse Research
vii. Accenture Strategy 2017 Future Workforce Survey
viii. Accenture 2017 Future of Supply Chain Research
ix. Accenture and UN Global Compact, “The Investor Study: Insights from PRI Signatories”, 2014
x. 2018 Edelman Trust Barometer
xi. EBITDA not available for companies in the banking industry

The bottom line on trust | Accenture Strategy 14

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