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Trust Building and Trust Busting: Corporations, Government and Responsibilities

Steven D. Lydenberg’s article “Trust Building and Trust Busting: Corporations, Government and Responsibilities” appeared in the Autumn 2003 issue of the Journal of Corporate Citizenship.

“Talk in the press,” writes Mr. Lydenberg, “is often of restoring trust in the corporate community. It is more accurate, however, to speak of creating such trust — a far more difficult task.” To do so, he argues, requires an increased role for government in promoting corporate citizenship and socially responsible investing. Three crucial elements are needed: data, debate, and consequences.

Governments must consider whether to require the disclosure of data on corporate citizenship, what the format and quantity of such data should be, and who will pay the cost of providing it. Governments should create a climate for informed and trustworthy debate by democratizing the structures of corporate governance, demystifying the vocabulary of corporations and financial institutions, and funding research. Finally, governments should encourage a fair system of rewards and punishments that addresses the problems of level playing fields and free-riders and that ensures that corporations are not hindered from continuing to innovate and to generate wealth.

Read the full Paper.