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Study: Income Inequality And Tax Avoidance Take Toll On Corporate Reputation
Arun Sudhaman
Holmes Report
President/Editor-in-Chief

Study: Income Inequality And Tax Avoidance Take Toll On Corporate Reputation

A new study of public attitudes towards corporations reveals broad consensus between the general public and the C-suite on the topic of income inequality.

Arun Sudhaman

NEW YORK—A new study reveals a sharp geographic divide between public attitudes towards corporations, with far more cynicism prevalent in developed markets around the world.

The new CNBC/Burson-Marsteller Corporate Perception Indicator polled more than 25,000 individuals from the general public and more than 1,800 business executives in 25 global markets, in a bid to analyse the roles and responsibilities of corporations.   

The survey uncovers a sharp divide between the developed economies of North America and Western Europe, and emerging economies like China, Russia and Brazil, particularly when it comes to how people view corporate influence over government, corporate stewardship of the environment, and — perhaps most importantly — the role corporations play as engines of job creation and economic growth.

In short, the general public in developed economies has a much more cynical view of corporations compared to the general public in emerging economies. In developed economies, for example, 52% of the general public has a favorable view toward corporations, compared to 72% of the general public in emerging economies.

The survey does, however, reveal general consensus on one critical topic — with both 'main street' and the C-suite agreeing that corporate CEOs don't care much about income inequality, because it means they are getting wealthier.

59% of C-suite respondents in emerging markets agreed with that statement, along with 56% of C-suite respondents in developed markets, compared to 64% and 60% of the general public in emerging and developed economies, respectively.  

Burson-Marsteller global CEO Don Baer cautioned that this finding should not be seen as referring to C-suite respondents' own views on income inequality. "They are commenting about what they see across the board."

Regardless, it is telling that C-suite respondents are less likely to concur with the oft-touted view that income inequality is bad for business. Only around one-third of those polled think "corporate CEOs do care about growing income inequality even if they are getting wealthier, because it is bad for business and the economy." 

While CEOs are, unsurprisingly, seen as some of the most powerful people in society, they are not especially respected, ranking behind government, clergy and even professional athletes in many markets.

That may be because pretty much everyone sees CEOs as being primarily motivated by their own compensation — a statement that ranked first among general public and C-suite respondents in both developed and emerging markets. For Baer, the findings make clear that "while the reputations of corporations and business leaders are improving, there is still real work to do to dispel doubts."

"People do believe corporations contribute to economic growth and job creation but that it’s important for executices and companies to communicate more about that role they play in helping to drive the larger economy," pointed out Baer, noting that corporations need to do a better job "articulating their purpose in society."

"The public wants to hear more about social responsibility and purpose," said Baer. "Creating shareholder value is important but they also need to create a sense of shared value."

To support his observation, Baer pointed to findings that revealed the general public, in both developed and emerging markets, see corporations as a positive force in economic growth, jobs and innovation. The general public across the world also has a strong appetite to hear more from corporations about social responsibility, regulatory and legal issues, and employees — rather than just about a company's products and services.

However, cynicism towards corporations in developed markets appears to be driven by taxation issues, another area in which there is broad agreement between the street and the C-suite. 57% of the general population and 53% of executives say corporations take advantage of tax loopholes to avoid paying their fair share rather than paying what they owe. 

Meanwhile, less than a quarter of the general public in developed markets feel that corporations have been sufficiently "humbled" by the economic crisis. 55% of the general public do not believe that corporations act more responsibly than before. In addition, the general public in developed markets do not see corporations playing a positive role on a range of key issues, including pay inequality for women and overall income inequality.

The geographic divide throws up numerous contrasts. In developed markets, a majority of general public respondents (46%) believe 'it is a bad thing when corporations are strong and influential, because they rig the system so they do not have to act responsibly.' The same statement draws only 34% support in emerging markets, where 58% of the general public think 'it is a good thing when corporations are strong and influential, because they are the engines of innovation and economic growth.'

In addition, in emerging economies the general public and business executives are much more likely to see corporations as a source of hope, rather than fear, when compared to their developed country counterparts. 

The geographic split is particularly pronounced between the US and China, with the latter country demonstrating far more positive attitudes towards corporate motives and responsibilities.

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