{"id":5599,"date":"2024-10-21T10:17:30","date_gmt":"2024-10-21T14:17:30","guid":{"rendered":"https:\/\/www.trustacrossamerica.com\/blog\/?p=5599"},"modified":"2024-10-21T10:17:31","modified_gmt":"2024-10-21T14:17:31","slug":"should-investors-care-about-trust","status":"publish","type":"post","link":"https:\/\/www.trustacrossamerica.com\/blog\/?p=5599","title":{"rendered":"Should Investors Care About Trust?"},"content":{"rendered":"\n

The returns of the Trust 200 Index over 13+ years according to IndexOne<\/strong><\/p>\n\n\n\n

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More than 15 years ago The Economist<\/em> published a briefing paper sponsored by Cisco, called \u201cThe Role of Trust in Business Collaboration,\u201d<\/a> 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.<\/p>\n\n\n\n

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.\u00a0This 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.<\/p>\n\n\n\n

*Trust Across America describes trust at the individual\/interpersonal level as the \u201coutcome of principled behavior\u201d and organizational trustworthiness as the “collective outcome of principled behavior.” <\/p>\n\n\n\n

Our ten+ year study<\/a> published in November 2021 continues to be, by order of magnitude, the most comprehensive and data driven analysis available regarding the trustworthiness of public companies. It speaks to both the public and the financial industry\u2019s understanding of trust, supports trust based investment decision making and enables targeted and simplified trust portfolio construction.\u00a0We analyze companies quarterly and rank order by company, sector and market capitalization.<\/p>\n\n\n\n

As our chart and study link above highlight, trustworthy public companies are rewarded over the long-term. They not only avoid expensive crises but also have the benefit of\u00a0broader internal and external stakeholder support.\u00a0<\/p>\n\n\n\n

Low trust keeps investors out of the stock market and on the sidelines<\/strong><\/p>\n\n\n\n

It has not been valuation, liquidity, or profits that keeps many investors on the sidelines. It is a lack of trust in both the financial industry and in the ethical actions and decision making practices of public company leadership. Even after a time of dramatic returns over the past several years, vast amounts of money remain parked in low yielding money market accounts and other underperforming investments. By delivering a time tested and \u201cbeyond reproach\u201d strategy to investors combining the key drivers of corporate trustworthiness, Trust Based Investing can serve as a viable solution that both the industry and the public has been seeking.<\/p>\n\n\n\n

In conclusion<\/strong><\/p>\n\n\n\n

Trust Based Investing provides the following:<\/p>\n\n\n\n