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From the Balance Sheet to the Value Sheet

This week, the World Economic Forum kicked off its annual summit with the theme of "A Crucial Year to Rebuild Trust" as the Davos 2021 Agenda. Aside from its virtual nature, this year’s summit is already shaping up as different from the last, in which the Luanda Leaks, disclosed as the global elite descended on the alpine town, sent shockwaves and forced Isabel Dos Santos to pull out of the summit at the eleventh hour. As the NGO, Global Witness puts it, the leaks revealed “new details about the lawyers, accountants and other ‘professional enablers’ in Western states that helped dos Santos”, which raised concerns that these reputable global institutions did not conduct adequate due diligence. 

What’s changed in the last year to drive this new agenda?

In the year since the leaks, trust in institutions has suffered, from the institutions involved in the Wirecard audits to those identified in the FinCEN Files. In a piece for Forbes, as part of The Davos Agenda, the World Economic Forum (WEF) focused its efforts on advocating exactly how corporate leaders can apply ESG tools to overcome global challenges using the term “stakeholder capitalism,” which the WEF says “made headlines over the past 18 months.” So, it shouldn’t come as much of a surprise that “global investors plan to double sustainable assets within five years, according to BlackRock's first Global Sustainable Investing Survey.”

Yet, despite Wall Street’s embrace of ESG, research by Reuters revealed that “the short positions against the companies deemed to have the best ESG credentials were 50% greater in size than those placed against the worst-performers.” So, what gives?

Notably, the WEF’s efforts to focus on rebuilding trust during this “crucial year”, as society rebuilds from a once in a century pandemic, is not only well-intentioned but backed by empirical studies. Trust Across America, a consultancy, has developed a model, called the FACTS Framework, to measure the trustworthiness of public companies. On average, in each of the six years since the first annual FACTS report, it has shown that the “Top 10” most trustworthy U.S. public companies have had a higher return than the S&P 500. In other words, trust has never been a more valuable commodity!

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