Trust in leadership is falling. The IC Index 2026, published by the Institute of Internal Communications puts hard numbers on a shift that many boards are yet to fully reckon with — and the implications for how non-executive directors govern stakeholder relationships are significant. This article draws on the research and a cross-sector board governance discussion to set out what governing trust actually requires of boards and NEDs.
Key takeaways
- Trust in UK senior leaders has fallen to 50%, a four-year low, down nine points in a single year
- The gap between leadership perception and stakeholder reality is where boards should focus
- Boards often arrive at trust through the lens of reputation but that is too late and too narrow
- Listing reputational risk on a risk register is not the same as governing trust
- The right board question is not “how was this handled?” but “did we know this risk existed before it became a headline?”
A governance problem, not a communications one
The IC Index 2026, published by the Institute of Internal Communication in partnership with Ipsos Karian and Box, surveyed 5,000 UK workers in large organisations. The headline finding is sobering: trust in senior leaders has fallen nine percentage points in a year to just 50%, a four-year low.
📝Definition: IC Index: the annual research into the state of internal communication in the UK, produced by the Institute of Internal Communication in partnership with Ipsos Karian and Box.
But the more important finding for boards sits beneath that headline. 87% of senior leaders believe their strategy has been clearly communicated. Only 57% of non-managers agree. On AI, the gap is starker still: 67% of leaders believe they have explained clearly how AI will be used; only 27% of employees agree. Leaders are operating with a confidence in their own messaging that is simply not shared by the people they lead.
This is not a communications craft problem. It is a governance problem and it lands squarely on the board’s agenda.
Trust is governed proactively; reputation is what reflects whether you got it right
Most boards encounter trust through the lens of reputational risk, something that appears on the risk register and surfaces as a concern when something goes wrong. That framing is too narrow, and it arrives too late.
Reputation is not something boards can govern directly. It is the external reflection of whether an organisation has consistently behaved in ways that warrant trust — with its employees, its stakeholders, its customers, its communities. The conditions that build or erode trust are what boards can and should govern: culture, behaviour, decision-making, and the alignment between what an organisation says and what it actually does.
This is where the first-order and second-order distinction becomes useful. Reputational damage is second-order: it follows something else going wrong: a safeguarding failure, a health and safety incident, a leadership conduct issue, a gap between stated values and actual behaviour. Govern those underlying conditions rigorously, and the probability of reputational damage falls significantly. Focus only on reputation as an outcome, and the board is always one step behind.
📝 Definitions:
- First-order risk: an underlying operational, cultural, or governance failure that erodes trust directly: a safeguarding incident, a health and safety failure, a gap between stated values and actual behaviour.
- Second-order risk: the consequence that follows. Reputational damage is typically second-order: the external reflection of trust that has already been lost.
The productive governance question is therefore not “how do we protect our reputation?” It is “do we have genuine visibility of the conditions that determine whether stakeholders trust this organisation?” That shift, from managing outcomes to governing causes, is where meaningful board oversight of trust begins.
An intelligence failure in plain sight
The cyber security parallel is instructive. Twenty years ago, boards treated cyber as a technical matter. Today, after too many high-profile failures, it is a board-level governance issue with dedicated reporting and clear accountability. Stakeholder trust is on the same trajectory. The question is whether boards act now or wait for the consequences to become unavoidable.
What the IC Index data reveals is a specific and avoidable failure: boards receiving a version of organisational reality that does not match stakeholder experience. When leaders consistently overestimate how well they are communicating on strategy, on change, on AI, the board is not getting the intelligence it needs to govern effectively. That is not a reporting problem. It is a governance gap.
Closing it requires boards to ask different questions: not “what have we communicated?” but “what do our stakeholders actually believe, and where are expectations diverging from reality?”
From monitoring to governing
Receiving stakeholder intelligence is not the same as governing with it. Trust metrics and sentiment data only earn their place in board reporting when they inform actual decisions, whether to proceed with a restructure, whether a policy change has sufficient stakeholder support, whether leadership behaviour is consistent with the culture the organisation publicly commits to. Without that connection to decision-making, it is monitoring, not governance.
📝 Definition: Stakeholder intelligence: structured insight into what an organisation’s key audiences think, believe, and feel. Distinct from what the organisation says to them, and from volume metrics such as survey response rates.
The practical shift is straightforward. One question, asked consistently at every board meeting: “What are we hearing from our stakeholders, and what does it tell us about trust in this organisation?” That single discipline moves the board from reacting to reputational issues after they emerge to identifying risks and opportunities earlier, which is precisely where non-executive oversight adds most value.
NEDs in particular carry a specific responsibility here. The right question is not “how was this handled?” It is “did we know this risk existed before it became a headline?” Pushing for earlier visibility, connecting stakeholder intelligence to strategic decisions, and holding management to account on the underlying drivers of trust, not just its surface indicators, is what governing trust actually looks like.
👉 The questions NEDs should be asking
- What are we hearing from our key stakeholders?
- Where might expectations and lived experience be diverging?
- Are there early warning signals of declining trust?
- Do our actions consistently reflect the values and commitments we communicate externally?
FAQs
Is reputational risk the same as a trust problem?
Not exactly. Reputational damage is the external consequence of trust that has already eroded, it is second-order. The trust problem comes first, in the behaviours, decisions, and gaps between values and action that boards are responsible for overseeing. Governing trust means addressing those upstream conditions, not just protecting the organisation’s public image.
How often should boards receive stakeholder intelligence?
Regularly, not occasionally. Boards that only review stakeholder sentiment when something has gone wrong are already in reactive mode. A brief, standing input at each meeting is far more effective than a periodic deep-dive after a crisis.
What is the difference between a communications update and stakeholder intelligence?
A communications update tells the board what the organisation has said. Stakeholder intelligence tells the board what audiences actually think, where trust is shifting, and what that implies for strategy and risk. The latter is what enables governance.
How does this apply to smaller organisations and charities?
Directly. For charities especially, public trust is the licence to operate. The governance principles apply regardless of size and the consequences of erosion can be existential for fundraising and mission delivery.
Take this further
NEDonBoard, Institute of Board Members, regularly convenes conversations on the governance issues that matter most to non-executive directors and board members. To join an upcoming event, visit our dedicated event webpage:
Drawing on insights from the IC Index 2026 (Institute of Internal Communication / Ipsos Karian and Box) and a cross-sector panel discussion on stakeholder trust and board governance, organised and moderated by Debra Sobel (founder at the Purpose Hub, NEDonBoard member) and featuring Jennifer Sproul (IoIC), Tom Flude (Charities Aid Foundation), and Elise Perraud (NEDonBoard COO and author of this article).
