The governance imperative of trust: Why boards must prioritise stakeholder confidence

By Nqobani Mzizi

Trust is not just earned; it is governed. This governance imperative applies universally. From private corporations to State-Owned Enterprises, trust is the invisible currency that dictates whether an organisation thrives or collapses. It is the bedrock of reputation and the lens through which all governance actions are judged. Yet, for many boards, trust is spoken of only in the context of crises, not as a standing governance priority.

An organisation can meet every regulatory requirement, produce clean audit reports, and still forfeit stakeholder confidence. Why? Because trust is built not through compliance alone, but through conduct, culture and consistency. The governance challenge is to make trust a conscious, measurable and strategic outcome rather than a by-product of other decisions.

Stakeholder trust is a strategic asset, influencing whether investors commit capital, customers remain loyal, employees stay engaged and regulators exercise discretion or impose sanctions. In King IV, trust is woven into the principle of stakeholder inclusivity, reminding boards that sustainable value creation requires both performance and legitimacy. ISO 37000 takes it further, framing ethical culture and organisational legitimacy as non-negotiable governance outcomes.

Boards that neglect trust governance forfeit their licence to operate; not legally, but socially. Once lost, this licence is far harder to regain than any regulatory permit. The solution? Proactive governance.

Trust, though abstract, becomes manageable when broken into components. Take competence: the ability to deliver on promises and meet performance standards. Integrity shines when decisions are transparent, fair and consistent. Reliability is demonstrated through follow-through over time, not only when circumstances are favourable. Care is shown when organisations prioritise stakeholder interests, even at short-term cost. Each lies within a board’s remit through strategic oversight, executive accountability and ethical leadership. But how can boards translate these principles into action?

Turning trust into a governance deliverable requires more than statements of values. Boards must integrate trust indicators into dashboards, using measures such as stakeholder sentiment, employee engagement results and customer satisfaction trends. They must carve out agenda time to review stakeholder perspectives, ensuring these are not reduced to token consultation exercises. Scenario planning must include potential trust shocks, with directors asking how decisions will affect stakeholder perceptions months or years ahead. Boards should also exercise close oversight over communication to ensure disclosures are honest, timely and clear, even when difficult.

Neglecting trust carries a steep price. It takes years to build and seconds to lose. Once eroded, governance costs rise, scrutiny intensifies, talent leaves and stakeholders doubt leadership. In extreme cases, organisations lose the mandate that allows them to operate.

Few cases illustrate this better than Toyota’s 2010 crisis. The automaker faced one of the largest recalls in history, involving millions of vehicles worldwide due to safety concerns. The crisis damaged its reputation for quality and reliability. The board acted decisively, overhauling governance structures, establishing safety oversight committees and elevating accountability for product safety to the highest executive levels. Importantly, Toyota engaged directly with stakeholders, from customers to regulators, with humility and transparency. It acknowledged the failures, corrected them and embedded the lessons into its governance processes. Over the following decade, Toyota regained market share and restored its position as a trusted brand, proving that trust can be rebuilt through sustained governance commitment.

Eskom’s struggles illustrate how governance failures erode trust. Years of load shedding, governance instability and opaque communication eroded public confidence to historic lows. While governance structures were in place, they often failed to deliver operational stability or meaningful stakeholder engagement. However, recent reforms are turning the tide. Strengthened board oversight, improved operational planning and more candid public communication have shown early signs of recovery. Challenges remain, but Eskom’s progress proves that even deeply broken trust can be repaired if governance acts with transparency, competence and reliability.

These experiences, from Toyota’s global recall to Eskom’s operational crisis, show that trust is not static. It shifts with how stakeholders experience the organisation over time. Governance that actively tends to trust through systems, accountability and culture can withstand shocks and recover from them. Governance that neglects it will inevitably face a legitimacy crisis.

Boards cannot delegate trust. It must be owned at the top, sitting alongside financial performance and risk management as a standing priority. It should be measured, discussed and protected with the same vigilance as any other strategic asset. When trust is embedded in governance thinking, decision-making becomes sharper, stakeholder relationships more resilient and organisational legitimacy stronger, yet this work also demands humility.

Boards must be willing to ask uncomfortable questions and confront truths that may challenge their perceptions. Directors need to look beyond quarterly reports and consider the lived reality of stakeholders. Are customers confident that promises will be honoured? Do employees feel valued and secure? Do regulators see the organisation as transparent and cooperative? These perceptions feed into the reservoir of trust that sustains the social mandate to operate.

Rebuilding trust, once lost, is not a quick fix. It demands consistency over time, a willingness to admit mistakes and a visible commitment to change. Toyota’s journey shows that recovery is possible when governance aligns with genuine accountability. Eskom’s recent progress suggests that even a deeply damaged trust relationship can be repaired if the board stays the course and communicates progress honestly. The lesson is that trust is both fragile and recoverable, but only through deliberate and sustained effort.

Trust’s absence is catastrophic. It determines which doors remain open, which partnerships endure and how resilient an organisation can be under pressure. Without it, even the most compliant governance structures will struggle to deliver value. With it, boards can navigate uncertainty, engage stakeholders constructively and sustain their social licence to operate.

So, the questions for every board are these:

• Does your board govern trust proactively or only to address it in crises?
• If stakeholders rated your trustworthiness today, what would they say and would you agree?
• What metrics track trust, and do they shape board decisions?
• When last did your board discuss strengthening trust without a crisis prompting it?

In governance, trust is a strategic enabler that influences every outcome. Boards that choose to govern it intentionally will safeguard their legitimacy and position their organisations to thrive in an environment where stakeholder expectations are higher than ever.

Once embedded into governance thinking, trust becomes both a shield in turbulence and a catalyst for enduring value.

* Nqobani Mzizi is a Professional Accountant (SA), Cert.Dir (IoDSA) and an Academic.

** The views expressed do not necessarily reflect the views of IOL or Independent Media.

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