For our October Crowd Forum, we were delighted to welcome Rachel Botsman on our stage - bestselling author and one of the world’s foremost experts on the intersection between technology and trust.
Her new book, “Who Can You Trust? How Technology Brought Us Together – and Why It Could Drive Us Apart”, is described as “a ground-breaking exploration of how the digital era is revolutionising human trust.” Rachel’s TED talks have been viewed more than 3.5 million times.
If you can't trust those in charge, who can you trust? From government to business, banks to media, trust in institutions is at an all-time low. Widespread corruption, elitism and economic disparity have led to a worldwide upsurge of anti-establishment movements. But this isn't the age of distrust - far from it.
Rachel explained how we are at the tipping point of one of the biggest social transformations in human history. A new world order is emerging: we have lost faith in brands, leaders and systems, but millions of people every day rent their home to total strangers on AirBnB, exchange cryptocurrency online, or get in the car of an unknown Uber driver. This is the age of distributed trust; a paradigm shift driven by new technologies that are rewriting the rules of an all-too-human relationship.
If we are to benefit from this radical transformation, it is vital that we understand the new mechanics of how trust is built, managed, lost and repaired.
On 9th October Crowd Forum, Rachel provided a detailed map of this unchartered landscape - and explored what's next for humanity, followed by a thought-provoking dialogue with fellow trust expert, Robert Phillips.
There were crucial lessons for all business leaders, policy-makers and entrepreneurs.
If business is to benefit from the radical transformation represented by the distribution of trust, it is vital that they understand the mechanics of how trust is built, managed, lost and repaired. The dynamics of trust are built on reciprocity and fairness. How can business embrace reciprocity through contributing, celebrating, connecting and re-connecting with the communities they touch? How can social media illuminate, amplify and support business’ community profile and engagement initiatives?
Question proposed to the Table by host.
* Bottom-up department action to support communities through local projects in collaboration with community organisations, completing volunteer projects is important.
* Highlight the importance of branding, noting several community support projects including supporting parents of children who are sick in hospital, through meal support.
* Importance of businesses in supporting the communities in which they work or the communities that are directly affected by their supply chains.
Host poses a question to the group - How can businesses re-build trust, must it be an internal business practice?
* Important not just to improve trust, but rebuild the brand. Financial gains still are a top concern of the business, and this will remain a systemic issue until there is a broader change where many other businesses change their practises to become more of a force for good.
* Business compliance is very important in the issue of trust and trust-building. As a water company, trust is very important when things go wrong, for example to keep communities on-side when a pipe bursts, there is a period of time within which people will retain trust, but beyond that time they lose faith in the brand. Thus, to continue to build community trust, good to get involved in many community projects and volunteering. Helps if these projects are driven from within the business, and is there better way of doing this kind of work?
* Maybe it is about becoming indispensable as a business to a community.
One participant answers that 50% of people do not agree that the water sector should be privatised, where this may be a branding or trust issue for the community, this issue must be overcome.
Host asks the question of how comfortable we should be with this issue of transparency versus trust, where it may be that if a company has to be very transparent, then they may have already lost trust, or where a company may not have to be fully transparent if they are highly trusted.
* Trust is highly important in communities to support company growth and continued brand development. In the case of a beer company, a brand must face community issues related to their product, for example social binge drinking, where community projects are an important way to build and improve the brand.
* Peer to peer business is important, because if one business makes a mistake then this can reflect poorly on the whole sector. Asks whether customers are asking for transparency, when actually what they want is trust.
* One participant said he clapped for Amazon during Rachel's exercise on Trust, to show that he believed Amazon was a trustworthy company, reflecting now that he clapped more due to the company being highly convenient and reliable, rather than actually having trustworthy business practises, noting that this is a clear example of a theme bought up by Rachel, that oftentimes, convenience trumps trust.
* One participant posits that many customers likely just buy certain beer or other brands due to being used to it, or knowing what they are getting, but brings in the issue of price, where many may not be able to afford higher quality brands and so must settle for a certain level of uncertainty and risk for convenience, in this case reduced price, where convenience trumps trust.
Host poses the question of what the future will hold for branding in the new age of trust.
* Participant notes that it is hard to tell as there is no KPI to measure trust.
Host poses the question of whether business has a responsibility or duty to make upcycling cool through shifting marketing and advertising department messaging.
* One participant responds that it would be fantastic if everyone (consumers) had a certain water quota, managed on a phone app for example, in order to help reduce overconsumption of material goods including clothes.
* Another added to the conversation, noting that advertising and marketing departments should aim to re-frame their messaging towards less consumptive behaviours, mentioning a programme called 'Next Generation Common Ground'.
Host posits that businesses must engage people for future talent, where the supply chain must be ethical, sustainable and transparent. As part of this, Nick highlights the importance of education around these issues.
It is mentioned that communication is not strong enough around the good companies are doing (external communications), some can better communicate their wins and community projects to better educate customers and even better educate their own teams to what they are doing to build brands and trust (internal communications). On the theme of internal communications, one notes that she often feels like a policeman in the company, and hopes that this interest in trust building and community trust building expands outwards to the entire brand.
Host poses the question of whether there may be consequences in this new way of thinking on trust within brands and the new relationship with consumers.
* One responds that some brands including his own may be afraid to make new innovative changes or big announcements on sustainability or materials, due to a risk of fear of negative backlash, and that due to this fear, businesses may be acting too safe.
Host poses the question of this risk in leadership, where businesses must take risks to be leaders, but how can this be managed?
* One posits that sometimes you have to present an idea as 'Business-as-usual', in order for it to be accepted in the market or to become leaders, where the risk may be quite high.
To wrap-up the discussion, the chair notes that while there is a lot to change for business overall to become more sustainable, ethical and rebuild trust, it must start internally from within businesses, and internal corporate culture.
As global awareness of climate change, and demand for leadership and action from business grows, companies can build trust by declaring their commitment to low-carbon energy transitions. How can low-carbon leadership help companies build trust in the community? What part can science-based targets play?
• Climate leadership only resonates with some of the public. The younger generation understand this more and climate change reputation is important for graduates.
• Low carbon leadership – you won’t always build trust if you show leadership, but you will lose trust if you don’t show leadership.
• People will talk more about bad company experiences rather than good ones.
• People won’t necessarily change their behaviour even if they do care about something.
• Larger companies may not need to take action on climate change because they don’t need to – people will use their company anyway.
• Regularly need to explain the business value of action on climate change. Can be difficult to persuade people who aren’t already on board or interested.
Red flags (warnings)
• Need to ensure that organisations are authentic around climate action, not just jumping on the bandwagon. Climate action needs to be genuine to build trust.
• If climate change targets are not science-based, why are they being set? May suggest that it is because it’s easier to attain.
• If leadership is declared, you have to be sure about what you’re offering otherwise you may open yourself up to criticism.
• Transparency can be a good thing and a way to show improvements, though it could backfire. However, it may be worse if you hide information.
• Data can easily be re-categorised to fit the outcome that companies want – this could be used with science-based targets.
• Promote ethical qualities in companies – different things can be directed to different audiences.
• Leadership should be consistent.
• Using science-based targets can give companies more integrity and an objective to reach. Third party verification can make action more credible and science can build trust. People will buy in to third party verification of trust and may be more likely to trust brands over science.
• Science-based targets can help with transparency of companies.
• Climate leadership in the housing market doesn’t give you an edge, as customers have other priorities such as price and location.
In a crowded world of finite resources, awareness of the need for conscious and collaborative consumption is growing. The rise of the sharing economy and the trend towards minimalism, exemplify this cultural shift. Can collaborative consumption help counter the tragedy of the commons? How can the distributed trust inherent in the sharing economy help us tackle global issues of resource scarcity?
Examples of Collaborative Consumption:
• Creating Wi-Fi hotspots using TV whitespace so that we can get internet access in rural parts of Africa – the more people using the hotspot, the more the mesh network works, and the better the hotspot is
o Increasing other interactions and sharing of things
o More human connections People want these human connections
o If someone in the village has the connection device, then they suddenly become a central location for advice, chat, etc.
o Smart meters: idea was to save money on power and electricity, but then the reality was fear mongering about big brother watching you
o Institutional trust was not there
o Media has hyped up that utilities can’t be trusted
o So, people did not want to trust the smart meters
• Institutions don’t work at scale because we don’t have that blind trust in them, like we do for certain individuals
o Example of an insurance company
o Instead, create a pool of saved money between a group of friends
• Shifting of ownership
o Could lead to better quality products
o Better for the consumer to lease washing machines for example
o Ownership remains with the company and they are incentivized to make a better-quality product that lasts longer, so they can make more revenue when it has a longer life
• We have to take responsibility for the decisions we make outsourcing our trust and decision-making can be risky
o Goes from being useful to being intrusive
o Example: Amazon echo
• If people don’t trust those people providing the essential resources, consumers will revolt
• Businesses have failed if they don’t get these trust issues right
• Principle of the commons – greed – someone will always pollute so everybody loses
• The role of the community is critical for trust
• Collaborative consumption and the sharing economy can be designed into policies and society and actual city planning
o Scandinavia and Australia
o But then there’s London where new flats don’t even have recycling
• In order for these initiatives to work, it usually needs to be enforced, like the 5p charge on plastic bags
• The sharing economy is making things more local rather than global.
o Sharing of resources
o Resource efficiency
o Problem lies in the governance structure that doesn’t understand the mechanisms required to regulate new companies in the sharing economy
• Marketing and PR used to be one way to build awareness and therefore, trust
o Now it’s about responsiveness
o And having a conversation
o And social media which is very hard to manage
• Idea of sharing economy with retail and consumer goods
o What does this look like?
o Luxury goods do this a little better – how can this model be altered?
Participants approached the discussion from different angles:
-Interested in the novel ways in which the sharing economy doesn’t merely replace another service of convenience, but where it actually makes a more fundamental change to the way people behave (e.g. an Uber driver that works at the airport who only turns on his app when he’ll already be going in that direction).
-Interested in the differences of scale, i.e. what differentiates and changes between a collaborative consumption network that is global (Uber, airbnb) vs more local varieties that hit smaller niches - particularly interested in if there are barriers of trust that might prevent scaling.
-Interested in the ‘truly cooperative model’ of sharing and collaborative consumption, rather than business platforms that utilize some mechanics of the sharing economy but remain traditional firms (such as Zipcar), and to what extent this variable (i.e. the primary motivation behind any given distribution model) correlates with the trust issue.
-Interested in ‘applied algorithmic values - or how the systems themselves define and enforce the values of society. Also interested in the ‘micro’ scale - the internal nuance of personal trust in decision making.
-How the collaborative platforms gain legitimacy, how accountability interacts (or doesn't) with the price mechanism. Also interested in how technology will increase or decrease consumption and what factors in with the narrative between changes in consumptive styles.
-[used to work at Uber] Interested in how the values of a company/product differ from the values of the consumer, and the different levels of tolerance for misaligned values. Looking forward, interested in applying the concepts of the sharing economy toward more collaborative models for urban/civic development.
-Interested in how the sharing economy and novel collaborative models might shift us from the ‘tragedy of the commons’ to the ‘comedy of the commons’ - where common/shared resources are actually better off than individual ownership.
Discussion started out and continued along decidedly moral themes, beginning with the concept of the triple bottom line and orbiting around the specific example of Uber
“I’m interested to know about how the non-financial impacts [of collaborative consumption / sharing economy] gets acted upon. Clearly the information is there, but a company like Uber has decided to ignore it or at least downplay their social impact.”
“That’s strange, though. The social and ethical impact of business is actually so much more accessible to the general public these days - if Uber led with the purpose of making that social impact, they would do great, even just in the London market”
“That’s an interesting point. From my perspective (banking), these sharing economy platforms are really still in their infancy, and perhaps they are just going through the same learning process that older more established sectors have gone through already - Banks, for example, learned a long while ago that they need to consider the wider impact and factor that into their business models… Uber might be just learning as it goes along, and in this case decided to put scaling and expanding as a priority instead of considering the social side of things.”
Discussion strayed for a bit but then was brought back on topic by our moderator
“So perhaps the question we’re discussing is how collaboration and the sharing economy can be directed toward desirable outcomes. Are we discussing regulation?”
“Actually, it’s much more about incentives, and changing the way products are sold and consumed. There are some interesting payment models that do this such as a washing machine where one pays per wash for the lifetime of the product - this kind of thing changes the incentives of the manufacturer to make their product as long-lasting as possible.”
“More conscientious business models are great, but at the end of the day there is some friction between the values of a product or company and the convenience of the service. If something is convenient enough, a consumer will ignore the moral and social impact in order to get that convenience.”
“That’s the key, to change the incentives and make the more conscious products simultaneously the most convenient. The broad, optimistic vision is to align incentives in such a way that always rewards the more conscious [morally/socially valuable] business.”
More and more consumers want their voices to be heard, they want change, truth and transparency. How can brands and businesses build trust that feels genuine to consumers? How can we communicate those messages in a meaningful way, through style, content and delivery? Is there a risk in communicating progress to gain trust or should you lead with the full story?
The parameters and areas in which brands, businesses voice their opinions, take a stance (politically, ethically, socially) or run their CSR programmes
• Are they entitled to have an opinion and to comment on issues? Especially if they do not relate to the business. If it doesn’t align with company’s profile and brand, there is a risk of seeming disingenuous. Advertising in this manner can backfire (both when they do speak out and when they don’t).
• Polarising (religion, politics) issues can alienate customers
• Difficulties in communicating to a new generation of engaged and possibly ethically responsible customers
• Cynicisms - when companies try to be both ethical and commercial
• It’s about expectations, and sometimes it’s better for companies to just be honest. For example we know that Ryanair will be dependable and reliable in providing cheap flights and taking us from A – B (most of the time), lots of people don’t expect them to speak out about any issues other than those that affect them such as airport and aerospace management/customer relations – yet it would be relevant for them to base their CSR and ethical and sustainability goals around pollution, sourcing and working conditions.
How do we measure trust? Where does it start?
• Trust is a process, and is transient and flows
• We learn more about trust and trust behaviour when something goes wrong, for example bad customer service, management and inefficiencies of product
• Values verses Capabilities: how much can a company retain trust if services are inadequate yet intentions, values and CSR good.
• A lot of trust is born out of and is based on personal experience (despite hearing contrary information). Personal experience is a bigger influencer than companies’ overall reputation and trustworthiness. For example people may say they dislike a company but not their local branch.
Human Interaction is important
• People trust people. Also, it’s harder to say no to people than it is to a brand.
• If companies truly believe in their product and values, and if this message is communicated/believed by their workers, this will then translate to the customer and be felt through their human interaction.
• Consumer power and agency – owning space. Although people acknowledge unethical practices by businesses or organisations, (due to busy lives or circumstances) convenience, accessibility, and expense can trump ethics.
Social Media and Influencers, helping companies become tangible human entities
• Speed in which we can make judgments and confirm bias before doing proper research and due diligence (leading to ‘Fake News’)
• We are bombarded with information, which leads us to out-source the decision-making, research and transparency work to governments and companies themselves.
• Compartmentalising - Websites and apps enable the public to connect with the brand with the parts of the brand they are interested in.
Genuineness and Communication
• Content rules to go by: Relate-ability, Share-ability and Novelty
• Other ways to communicate stance on issues, for example state sustainability of packaging or sourcing method on product
• Communications Team should be disseminating CSR stories (for example BT has some great CSR programmes that not many people know about)
• Some organisations use a Moral Compass system of determining what projects to work on. – If the project doesn’t adhere to the Moral Compass points, then the company has to discuss whether or not to go forward, if they decide not to – then they have to explain to the client why. This ensures a standard, consistency and trust between them and their other clients, and their customer base.
-Transparency: How much transparency is required may depend on the context. For some businesses, total transparency might make consumers run; must first build trust. On the flipside, a fintech company in the US, Lemonade, is tapping into new and younger markets and changing the insurance market by being up front about where customers’ money goes. Transparency may be especially important in the finance sector.
-Authenticity: A sense of authenticity must be not just between a business and its consumers but also within the business itself. Vulnerability conveys authenticity; we don’t trust what looks perfect. Authenticity is key; people are content so long as a company is doing what it says it does. Inauthenticity is where trust is lost. (How to signal authenticity: certifications, biannual reports?)
Red Flags (warnings):
-Open access principle may be difficult to sell from a PR perspective, as customers can be wary.
-Appetite among businesses to display vulnerability appears to be limited. Businesses are hesitant to report when they are performing below expectations, despite this making them more believable.
-There is a bandwagon of a culture of values, with different degrees of genuineness with respect to purported company values. Selective transparency: Ryanair admitting fault, but selectively so. Not clear this will result in improvements for customers.
-Building trust through vulnerability and transparency becomes harder as a company grows and accountability is more difficult to ensure.
-Information gaps: It can be difficult to track down information, like where your pension fund money is going. Consumers demand information at great speeds. Hard to know what information sources to trust. Overload of peer review sites.
-Convenience and big data: Will businesses lose consumer trust if they’re seen as over-relying on sneaky algorithms? Maybe not, as we readily give over our information to companies for the sake of convenience. Google, Facebook make enormous amounts of money for selling more targeted advertising, without us really understanding the consequences. We are not willing enough to make things harder for ourselves.
-Businesses can respond to the changing landscape of trust (to distributed trust) by instilling trust in early adopters, who can then propagate distributed trust. Businesses can build trust through education of early adopters on key benefits, and by giving consumers a sense of control.
-Trust can be built through networks of trust (e.g., LinkedIn model) or through strong leaders.
-We’ve lost what we’ve lost, but that doesn’t mean we have to lose everything—e.g., we have the capacity to reclaim our financial identities through blockchain technologies.
-Enlightened consumerism: due diligence prior to investments and purchases, versus an assumption of trust and then erosion of trust. Degree of prior due diligence usually depends on the stakes involved if things were to go wrong and convenience of ethical choices.
-Rise of the feminine (collaboration, generosity of spirit, social). A more feminine culture can instill trust: measurable increases in productivity and trust in brand. Diversity within business means there is a better chance of employees’ feeling represented and in-building trust.
-Major communications company: made a choice a few years ago to be radically transparent, starting with rebuilding trust within the organization. Employees understand why the company is making the decisions it is. First priority was to build trust between employees and the tax team.
-Not necessarily the case that we are outsourcing our trust to algorithms. Employees can trial and error new technologies independently and without relinquishing accountability/control.
-Consumers are more willing to relinquish their data if it has the potential to be personally helpful. Advertisements will reach this point.
In a socially connected, increasingly distributed world, trusted business reputations often hinge on good compliance and reporting transparency. How can companies enable trust through robust ESG compliance and reporting systems and processes? Why is clarity, consistency and commitment to ESG compliance and reporting so crucial for trust building?
Why is clarity, consistency and commitment to ESG compliance and reporting so crucial for trust building?
• A good reputation is crucial for a business to make money
• So many companies have targets and commitments but down the line they don’t live by those statements and don’t deliver on those promises which erodes trust
• To ensure ENRON doesn’t happen again where trust in large companies/institutions is abused
How can companies enable trust through robust EGS compliance and reporting systems and processes?
• How much information do you report to your stake holders? There is a risk of over reporting
o In reality it needs to be digestible
o If you put too much information out there, the non-imperative information can distract from the good information
• Blockchain shows ALL data that you put in and stores it, if its bad data, it still stays in the blockchain, so it’s important that the right data is there. More isn’t often better.
• Consensus on reporting across organisations is very important and creating a common metrics and terminology is important. How do you get them to speak the same language?
o Another member of the table - Very noble but it’s not realistic.
• Assurance is very important; how do you collect and manage your data?
What does best practice look like?
• Publicly ratified process
• Take something complicated, digest it, and explain it so that someone with NO training can understand. Make it entirely user friendly to a layman.
• Amongst leading reporters, simplifying and storytelling is high priority
• Use automated data collection and verification systems to let sustainability experts make things happen, and take action on plans rather than having to investigate missing and inaccurate data.
• Internal and externally, what you need to communicate with the customer base
o Why do you want to know?
• If you tell the CSR story, and competitor does not, there is a high probability, the consumer will be listening.
• Also silence in regards to CSR programmes can put you behind the pack
• It is not about not being the best or never missing targets
o If a company is striving to be better, it is much more powerful to set stretch targets and be transparent about any reasons for under performance rather than be unambitious.
o Consumers have a softspot for an underdog trying to better themeselves
• A financial return is not a true reflection of its worth
• “Doing Good Better” by William MacAskill was mentioned as including good examples where greater transparency on the impact of charities can influence where people put their money e.g. the incredible cost effectiveness of providing de worming tablets without the use of middlemen.
• Alignment with intentions
• Keep it simple, less is more
• Trust is not everything, but it’s really important
How can companies take a strategic approach to building trust? Why is it crucial for companies to assure the performance of their organisations, products, people, facilities and supply chains in order to build a solid foundation for trust?
1. What are companies biggest risk for trust?
• Lack of due diligence
• Getting something right from the beginning, showing integrity
• Ability to communicate with customers in accurate and positive capacity
2. What aids in trust for companies?
• Quality of service and products
• Communication and transparency
• Reliable technology
3. What provides assurance?
• Post occupant surveys after the certification is an example of assurance that brings trust
• Reviews of customers or suppliers gives assurance, and these need to be trusted as well (for example TripAdvisor)
• Video of delivery drivers going into the house to drop of the parcel, for the delivery
• Vertical traceability of the product is important, in the supply chain and it is important to integrate this. Totally authentic vertically integrated supply chain.
• Tell a story that makes the customer understand the transparency. E.g. Take customers to see the fisherman.
• Using Blockchain to trace your food. Using Blockchain to trace certificates & audit stamps.
• Future of assurance is an authentic and consistent storytelling potential
• Responding to issues in the media is also important even when you do not have the answers, but being transparent about what you are going to do to bring assurance
• Never be complacent
• Culture for trust, trusting employees. It is a two-way thing, if you give trust you will get it back. E.g. customer supplier relationships.
• Impact assessment – make a positive impact on communities and measure this.
• Integrity is key
Multiple studies have confirmed that the first step in gaining trust is to give trust to others. For businesses, charitable giving can be a way to build trust and credibility amongst communities and customers. So how can businesses effectively gain greater trust through giving? What is the role of corporate and employee giving? What are the risks involved in giving which can undermine a company’s positive contribution?
• What it is we trust when we think about companies? Who is the trust for? As companies, whose trust are we looking to gain?
• Role of giving in gaining trust: Relevance is an important criteria. Giving needs to be relevant to the brand. Trust will depend on who does the giving. For example, Tesco had a food recycling programme, but in contrast to M&S they were not perceived as authentic, because their reputation was not good in the first place. So the issue needs to be their issue to be solved. Giving can backfire if there is no integrity. It has to be relevant to the company, not just giving money to the Red Cross.
• Lot of it is common sense. For example, Cadbury sponsoring sport kits will not be source for trust.
• It is important that we differentiate between different stakeholders in terms of whose trust we are looking to gain. Giving programmes will have different impact on employees, customers, and investors.
• Value of giving became important, but it is divorced from impact. It is still genuinely difficult to measure impact. Could this democratise giving? There are around 30 different impact measurements. They are not perfect, but still better than having nothing. Companies are focusing on impact because of the stories they can tell. They want to communicate stories.
• We discussed a number of good examples:
o Gaining employee trust: Prudential’s ‘Volunteer Heroes’ programme that gives recognition to employees, while obtaining brand engagement.
o Gaining customer trust: Dulux funding ‘Community Repaint’ charity, who reprocess recycled paint. Biggest benefit is not financial, but in skills. People would not necessarily trust charity paint, but they trust Dulux. So they use their trusted brand to help.
o Gaining customer and employee trust: M&S food waste programme started with donating money, but at the end achieved greater impact with high employee engagement.
o Gaining employee trust: Grant Thornton benchmarked charities that were aligned with their purpose of building trust in financial markets. Then employees voted on which charity they would like to support.
We need to think about receivers, not just givers.
The key message in Rachel Botsman’s new book, revolves around the concept of distributed trust. When considered against the backdrop of the growing distribution and decentralisation of energy generation and management, the transition to renewables hits the sweet spot for building trust in the new distributed economy. This roundtable will consider the opportunities for renewable energy generation and exchange for building trust and strengthening community connections.
How did the main panel relate to each roundtable attendee and what are their main focus points on the topic Renewable Energy Exchange in the Distributed Energy. Main ideas:
• The possibility to structure an electricity supply in a distributed business model and the issues that would come with it
• How distributed energy could help or change the dynamics of investments in renewable energy and how to solve for the intermittent feature of solar and wind energy
• Stakeholders are currently trying to solve problems in the extremely complex energy system the way it is, while we should go back to the basics and discuss the current needs and the new possible sector dynamics given new technology
• How blockchain helps democratize energy provision – limitations of blockchain benefits due to higher economic and political interests
• The benefits of information transparency to customers
• New system organizations to leverage the impact of renewable energies
• How to use customer data and get in a trustworthy position – limitations of algorithms trustworthiness - flows of data within data distribution could be very helpful to leverage business of distributed energy
How could the first microgrid be created? It is important that a group of companies/investors needs to take the lead and develop the first shared energy project.
• One of the main barriers for that is that the sector is highly regulate
• Comparison between the certainty that people had in the 90s, that the retail sector was completely well structured and could not be disrupted, but over the last decade we saw the complete change of that. In a comparison, can the energy sector suffer a similar disruptive change? Maybe the scepticism is just due to our difficulty to see and expect such disruptive future changes
• A few of the changes in the energy sector dynamics are already happening in Japan. In the UK, the infrastructure is too expensive and makes this change more difficult, but it could still happen
What are the possibilities to stay disconnected or partially connected to the grid?
• Electrical cars for example, would benefit from lower charges if not connected to the grid at all
• On the other hand, projects built on the grid are receiving increasing subsidies and are making grid projects more appealing for investor return
• Because renewables have an intermittent feature it is complicated to stay (at the current time) completely independent from the grid
• Most solar panel projects completed by (renewable energy provider) are dependable on the grid
• The new storage technologies could help fill this gap and change completely the market dynamics and dependence on the grid
What are the challenges of having a distributed energy system?
• An efficient distributed business model would require different profile of energy producers and customers. And this would also depend on trust among stakeholders
The cost of sharing energy within a community: who would pay for the cost of microgrids?
• The convenience offered by current players would be something that the new system would have to provide as well. She mentioned that research has shown that in the UK, customers value convenience (apps to make payments and control boilers from distance, for example) even more than price. Also, average customer would not pay a price premium for renewable energy
• In the UK, citizens are not open to highly profitable energy companies (and high prices) because they are used to having free access to heat and electricity as in the past
• Energy companies need to keep power prices relatively low to “keep customers warm” and keep them in the long run
Is there a potential that renewables will become so cheap that there will be no need to distribute energy? Maybe in 10 years energy will be so cheap that it will be generated only locally?
• There is no evidence that renewable energy could become so cheap within this timeframe
• Technologies are improving in increasing speed. Certain customers in the offshore wind farms are already bidding to projects that consider turbine capacities that currently non-existent. This shows the expectation that technology will improve fast in the short run
• How this would affect the economy and if it meant more profits for developers? It would mean more profits for developers but also lower prices for customers. For the first time in history, an offshore wind power farm project started with zero subsidies (in Germany). This shows the potential of the technology and its increasing efficiency.
Blockchain can make transaction costs disappear within a distributed energy structure and that microgrids are already being built. There might be a chance to overcome regulatory barriers just for the fact that they are not prepared to such disruptive technologies (just as is happened with Bitcoins)
How can companies take the guesswork out of their stakeholder engagement and social impact assessment work? What part can strategy play in building a sustainability narrative that creates trust amongst stakeholders and demonstrates business leadership? How can companies best integrate their social impact assessment and reporting with their stakeholder engagement strategy as an exercise in trust-building?
The roundtable discussion focused on:
- Practical action stemming from the plenary discussion of trust
- What does this mean for companies: transparency, licence to operate and stakeholder engagement
The idea that transparency is only necessary when trust is gone is a challenging one to respond to, when most stakeholders and most companies currently see transparency as the route to trust. Perhaps this reflects a situation where trust has already gone.
Distributed trust of the sort Rachel Botsman described seems to be an interpersonal thing. Where does this leave trust in companies and brands – will it inevitably decline or cease to mean anything? People still seem to place a remarkably high level of trust in brands – perhaps as the embodiments or avatars of the algorithms they are happy to delegate decisions to. Do people think of Alexa as a person, a brand, a company, a robot or an algorithm?
Some takeaways for business:
- The sense that trust is declining may be more to do with the changing mode of trust (away from trust in institutions and towards distributed peer to peer) than any absolute decline. We may worry too much about loss of trust and not celebrate enough the reality of plentiful trust.
- Trust is best understood and cultivated as a function of relationships and human engagement. Knowing your stakeholders seems more important than ever. Building trust with local stakeholders seems to pay off. Finding out what global stakeholders care about via social media may be less effective.
- Transparency seems to be a precursor for trust in business, and in any business case for building trust as part of social capital, and ultimately social value. It’s not clear how Gen Z, for example, will trust the ethical merits of apparel products without transparency.
- Can we use this analysis of trust to better understand stakeholders – for example that they are people in communities, rather than just customer segments?
- Changing patterns of trust change the role of sustainability professionals in business. How do they cultivate trust, and what are they trusted to do by internal and external stakeholders?
The idea that outsourcing of decision making to algorithms is inevitably going to accelerate is intriguing. People ‘taking personal responsibility and making wiser choices’ might be one way to resist, but sounds a bit optimistic. If anyone has something more optimistic to say about what appears to be a one-way street to democratised alienation, keen to hear it!