Ethical Leadership in the Age of Transparency: Building Trust with Stakeholders

April 17, 2024

There’s a meme that’s been going around for a few years that you may have seen: BUILT DIFFERENT. 

The meme typically features an image or video with the caption “built different” or a variation of it. The phrase is often used humorously or sarcastically to highlight someone or something that is perceived as unique or unconventional. 

For example, the caption “built different” under a picture of a hardworking gym or fitness enthusiast draws attention to the intense dedication that these individuals have to their health and physique. “Built different” under a picture of someone obsessed with coffee suggests that there is something unique and special about people who drink tons of coffee. 

I think that what we need is a built different meme for today’s consumers because it’s true: today’s consumers make purchasing decisions based on priorities that no one cared about before. Namely, they want transparency! 

No matter what industry you’re a part of, your consumers want to know your values, your priorities, and even your processes, as transparency has risen quickly to the top of the list of consumer priorities. 

If your consumers are built differently from those of the past, then you’re going to have to show that you’re different, too! Let’s talk about how you can build trust with all of the stakeholders of your business, including your customers, employees, investors, and more. 

But first…

When did transparency become so important to stakeholders? 

In 2022, Nielsen researchers found that “Eighty-one percent of shoppers say transparency is important or extremely important to them both online and in-store.” 

Social media has arguably played a big role in the development of consumers’ prioritization of transparency. SproutSocial reports on data that shows: 

  • 86% of Americans say transparency from businesses is more important than ever before. 40% attribute this to social media, which has increased accountability for businesses.
  • 81% believe businesses have a responsibility to be transparent when posting on social media–more than politicians, friends/family, or even themselves. However, only 15% think brands are currently “very transparent”.
  • Transparency on social media leads to 53% of consumers likely to consider a brand for their next purchase. Lack of transparency makes 86% likely to switch to a competitor.
  • Consumers want transparency from brands on social media regarding values, employment practices, product changes, etc. They see live video as the most transparent format.
  • One-third say a CEO demonstrating transparency on social media makes them more likely to purchase from that brand. CEO transparency also positively impacts employer brands for recruitment.

Those are some pretty convincing pieces of evidence that you need to be prioritizing transparency!

The connection between transparency and ethics

Transparency and ethics share a symbiotic relationship. At its core, transparency is the deliberate act of openness. It is all about providing clear and accessible information to the public about your company’s actions, decisions, and processes. The impact of microleadership in this context is significant, as it emphasizes small, consistent actions that uphold transparency and ethical standards. This approach fosters trust among stakeholders, demonstrating that even minor, everyday decisions are made with integrity and openness.

A commitment to openness serves as an enabler of ethical behavior. It fosters trust among the stakeholders in your community. 

If you are behaving ethically, then transparency is neither threatening nor risky. Unethical behaviors almost always go hand-in-hand with opaqueness and avoidance. 

Think of it this way: if you are trying to hide unethical behavior, you’re not going to want anyone shining a flashlight in the corners of your company’s operations. If you are behaving ethically, you’re not just inviting people to shine a flashlight into your corners–you’re turning on all the lights and welcoming the skeptics and critics! 

You can’t just be ethical–you have to prove it 

How do you turn on those bright lights and show your customers and clients that you can be trusted? I want to share 5 of the strategies that I have seen work for companies just like yours. These steps toward full transparency will help you build trust with your customers and community. 

1. Publish annual sustainability reports. 

Regularly publishing comprehensive sustainability reports demonstrates your commitment to transparency in disclosing the Environmental, Social, and Governance (ESG) aspects of your operations. 

These reports should highlight: 

  • actions to have taken to maintain responsible practices
  • how you are limiting your environmental impact
  • your progress toward sustainability goals

With 78% of today’s consumers expressing that they care about sustainability, communicating your efforts to build a sustainable organization is paramount. 

2. Create a “Values” page on your website

Your website can’t be the only place where you share your values–but it’s a great place to start. Adding a dedicated page to your site that outlines your core values and how they shape your decision-making. This lets your stakeholders know what to expect when they work with you, and it also serves as a reference point for aligning your company’s actions and values. 

3. Keep your customers engaged with a meaningful email newsletter

Sharing regular email updates with your customers is a proactive approach to transparency. You can highlight recent ethical choices, sustainable initiatives, and standards you’ve upheld, keeping your stakeholders informed and engaged. 

Not only does this build trust, but it educates your customers about your company’s commitment to ethical practices. It also helps with building leadership skills within your team by encouraging consistent communication and ethical storytelling.

4. Create shareable content on social media. 

Social media platforms provide such a great avenue for sharing authentic stories about the work you are doing to contribute to your community. Sharing inspiring stories about your employees, suppliers, and even customers creates more trust in your work. 

I recommend posting things like: 

  • Behind-the-scenes videos and photos from your facilities, showing your safe, fair working conditions
  • Stories and testimonials from partners, suppliers, and local communities about your company’s positive social and environmental impact
  • Infographics explaining key issues related to your industry, providing education and clarity
  • Blog posts from the CEO or founders explaining how decisions are made within the company
  • Employee spotlights that put a human face on the company’s culture and values
  • Support for awareness campaigns that are directly related to your ethical priorities, including diversity, sustainability, and community engagement
  • Ongoing coverage of community or industry events that further your ethical commitments

5. Develop thoughtful data usage policies. 

One of the things I haven’t touched on yet is data–consumers want you to be ethical in the ways that you handle their data. In fact, bad use of personal data can have a negative impact on your brand! Having a clear Terms of Service (TOS) is not enough–you need to develop thoughtful and easy-to-understand policies about exactly how you will collect, store, and use data. 

Consumers are increasingly concerned about data protection and the ethical use of information; prove to them that you are going to protect their personal information! 

Show transparency and ethics

Leadership in business has always required ethics–now you have to show it

The tide of transparency is rising—and it’s time for companies to adapt or risk drowning. While I have outlined several strategies for demonstrating ethical practices to your stakeholders, transparency must evolve from a set of tactics into an organizational mindset.

What bold, industry-leading transparency pledge might your company make next? Could you invite an external auditor to certify your sustainability reports or customer data practices meet the highest standards? Could you appoint an independent ombudsman to field and publish transparency concerns?

The companies that will thrive amidst “built different” consumer expectations are those looking ahead to imagine even brighter lights shining in even darker corners. They will successfully navigate the terrain of transparency first and blaze trails for others to follow. With trust as the ultimate competitive advantage, how will you lead your peers ethically into tomorrow?