Trust as an Investment Decision Factor

The returns of the Trust 200 Index over 13+ years according to IndexOne

Almost 20 years ago The Economist published a briefing paper sponsored by Cisco, called “The Role of Trust in Business Collaboration,” concluding that tens of millions of dollars had been spent evaluating corporate governance but a *definition of corporate trust continued to elude us. The 2008 financial crisis essentially destroyed investor confidence in the stock market and the ethical decision making practices of business leaders and their public companies. And so it should come as no surprise that trust in the financial markets has stagnated and even deteriorated since that time. After all, what actions, if any, have organizations taken to build investor confidence and trust? Plenty of money is spent on PR “talk” followed by little constructive action.

What if instead of using the elusive word “trust” as the barometer, companies could instead be evaluated based on their trustworthiness? In other words, the ethical business principles and leadership practices that support trust building within the organization and can then be applied to all stakeholders. This was the question we began to address over fifteen years ago. With the assistance of academic, financial, corporate and consulting professionals, Trust Across America began to construct what became the FACTS Framework.