Loyalty and trustworthiness are the foundation of strong and enduring stakeholder relationships. They are the invisible threads that hold organisations and their stakeholders together, ensuring that engagements are productive, commitments are honoured, and reputations remain intact. Without them, the fabric of stakeholder relations begins to unravel, leading to scepticism, disengagement, and reputational damage.

Loyalty in stakeholder relationships refers to an organisation’s unwavering commitment to its stakeholders, even when faced with challenges or competing interests. It is about consistently prioritising the needs and expectations of stakeholders rather than treating them as disposable assets. On the other hand, trustworthiness is about reliability, honesty, and transparency. A trustworthy organisation does what it says it will do, provides accurate information, and does not manipulate, deceive, or exploit its stakeholders for short-term gains.

When loyalty and trustworthiness are at the core of stakeholder engagement, organisations enjoy long-term partnerships, goodwill, and a strong reputation. However, when these principles are violated, the consequences can be severe. Trust is the currency of stakeholder relations. It takes years to build but only moments to destroy. Once broken, trust is complicated—and sometimes impossible—to rebuild. A loss of credibility means stakeholders stop believing in the organisation’s commitments, making it harder to rally support for future initiatives. Reputational damage follows quickly, with negative media coverage, social media backlash, and long-term brand erosion. Some breaches of trust also result in lawsuits, regulatory penalties, and lost revenue. Disillusioned stakeholders, whether customers, investors, employees, or community partners, often withdraw their support. A damaged reputation can deter new business opportunities and partnerships, significantly reducing an organisation’s competitive advantage.

Examples of trust breaches in stakeholder relations are plenty, but two notable cases stand out. Volkswagen’s emissions scandal 2015 saw the company deliberately install software in diesel vehicles to manipulate emissions tests, deceiving regulators and customers about their cars’ environmental impact. When the deception was uncovered, Volkswagen faced billions in fines and legal settlements, the CEO resigned, shareholders lost significant value, and public trust in the brand plummeted. It took years of damage control for the company to begin rebuilding its reputation. Another case is the Facebook-Cambridge Analytica scandal in 2018, where Facebook allowed Cambridge Analytica to harvest personal data from millions of users without consent, which was then used for targeted political advertising. The consequences included a loss of user trust, a $5 billion fine from the U.S. Federal Trade Commission, increased regulatory scrutiny, and lingering reputational damage that still affects the platform today.

Once trust is broken, an organisation must take deliberate steps to rebuild it. The first and most crucial step is acknowledging the breach and taking full responsibility. Avoiding accountability worsens the situation, so companies must own up to their mistakes transparently and publicly, showing a willingness to make things right. Silence breeds speculation, so communication must be transparent and consistent. This involves clear public apologies from leadership, frequent updates on corrective actions, and making executives available to address concerns. Actions speak louder than words, and corrective measures must be implemented immediately. Companies must remove individuals responsible for unethical behaviour, revise policies and governance structures, and strengthen compliance mechanisms.

Stakeholders should be engaged in the recovery process. This includes holding forums or consultations to understand stakeholder concerns, inviting third-party audits to ensure credibility, and involving respected industry experts in oversight committees. Trust is not rebuilt overnight, and organisations must demonstrate a long-term commitment to ethical practices by embedding integrity into their corporate culture, regularly training employees on compliance, and ensuring ethical leadership at all levels. In cases where financial or personal harm has occurred, meaningful redress is crucial. Compensation, public initiatives to address broader social or environmental damage, and long-term programs to restore public faith must be prioritised.

Organisations that uphold loyalty and trustworthiness in their stakeholder relationships gain more than just credibility—they earn the respect, commitment, and advocacy of those they serve. However, breaking trust is not just a mistake but a strategic disaster with long-lasting consequences. For stakeholder relations professionals, protecting trust must always be a top priority. Where trust has been compromised, urgent, transparent, and ethical action must be taken to repair the damage. After all, in a world where reputation is everything, trust is an asset no organisation can afford to lose.

What are your thoughts on the importance of trust and loyalty in stakeholder relations? Have you seen organisations successfully rebuild trust after a crisis? Let’s discuss this in the comments!