Why Millennials Will Be This Decade’s Corporate Watchdogs
Consumers are increasingly skeptical of traditional businesses and looking for alternatives to exploitative or destructive practices
In the process of creating stuff people want to buy, businesses also create a vast medley of byproducts and aftereffects that are decidedly less good. They add to what feels like a pretty depressing state of affairs: the climate crisis is reaching intimidating, unprecedented heights, millions of people suffer daily from environmental health risks around the world, mental health issues are driving a steady uptick in suicide rates, obesity is on the rise, inhumane working conditions have been normalized for a nontrivial portion of the population, and so on.
It’s clear that something’s got to give. And I believe we are beginning to see a shift from enterprises scrambling to avoid responsibility for these issues to a new class of global business leaders seeking to actively identify and eradicate them.
Changes in consumer consciousness, led by technological advances, increased levels of transparency, and demographic shifts have shown forward-thinking business leaders that “doing well by doing good” makes economic — not just moral — sense. With today’s value-driven business leaders as its early adopters, a vital, sustainable materialism began to emerge in the 2010s. In the 2020s, this new materialism will go mainstream.
Our values, they are a-changing
Part of this change stems from the fact that in the 2020s, millennials (my generation) will come into their own as society’s corporate and political leaders. Here’s what we know about the shifting values of tomorrow’s future leaders:
We need only look as far back as the 20th century to remember that a product’s supply chain was not something consumers worried much about. But we certainly do now.
Millennials are increasingly skeptical of traditional businesses
Deloitte’s 2019 Millennial Survey found that millennials “share a growing view that businesses focus on their own agendas rather than considering wider society — 76% agree with that sentiment — and that they have no ambition beyond wanting to make money (64% agree). It also is likely influenced by a continuing misalignment between millennials’ priorities and what they perceived to be business’s purpose.”
Millennials believe businesses are responsible for employee well-being
The majority of millennials (73%) believe that employers are responsible for managing or reducing workplace stress.
One-third of us believe that enhancing employee livelihood is a top priority for employers, while only 16% feel businesses currently do so. And that’s a pretty high bar to hold companies to.
Millennials expect companies to take a principled stance on social issues
More than a quarter of millennials chose not to purchase from an organization because of its stance on a political issue, and 29% did the same based on the comments or behavior of a company leader, according to Deloitte’s survey.
Not only that, but this expectation is more pronounced among millennials than any other age group. In a different in-depth survey, seven in 10 U.S. millennials said they actively consider company values when making a purchase compared to 52% of all U.S. adults.
Millennials’ concern for the environment is driving our economic behavior
Driven, perhaps, by the undeniable urgency of the climate crisis, millennials, more than any other age group, are “highly worried about global warming, think it will pose a serious threat in their lifetime, believe it’s the result of human activity, and think news reports about it are accurate or underestimate the problem,” according to a Gallup poll.
Explicitly identifying society’s role in the climate crisis, I believe, underlies some of the key trends here. A study by Nielsen, for instance, showed that 73% of millennials are willing to pay extra for products that are sustainable.
To quote one study participant: “In other words, I’m willing to spend more (a lot more, in fact) to know that what I’m spending my money on is actually good for the earth and the people on it.”
This sounds normal now, but in the broader scope of history, it is a relatively new perspective that flies in the face of the Rational Behavior theory on which much of modern economics is based. We need only look as far back as the 20th century to remember that a product’s supply chain was not something consumers worried much about. But we certainly do now.
And it’s not just millennials
I realize that the world does not revolve around me and my fellow millennials. So it’s encouraging to see this trend cross generational boundaries. The data shows that Gen Z is very much on the same page, which is particularly invigorating given they’ll be the ones taking our spots when we retire to ride our own mopeds around Florida.
A 2017 study on values and attitudes found that Gen Z, which already account for 40% of all consumer purchases globally, is the generation most likely to believe that companies should address urgent social and environmental issues: a whopping 94% of those surveyed said so (even higher than the 87% of millennials).
But that’s only part of the story. We see these value shifts happening across the board. So while it’s true that 70% of millennials care about the source of the ingredients in the supply chain, it’s telling that half of Gen Xers and baby boomers do, too.
These numbers have gone up across every generation over the past few years. In fact, 2017 was the first time in history a majority of Gen Xers actively considered company values when making purchase decisions.
Why things are changing now
Consumers have demanded change and ethical values from corporations many times before. So is this really different? Yes, I believe so. Here’s why:
1. The digital age comes with unprecedented access to information
We, the digitally connected, have access to a steady stream of information that previously companies were able to shut out from the outside world — whether that’s damning internal memos at Google, recordings of Uber’s former CEO berating people for making poor life decisions, or minutes from high-level Facebook meetings. Hell, when I was at Uber, New York Times reporter Mike Isaac basically live-tweeted our confidential weekly Q&A sessions by getting access to the streams set up for employees around the world. I literally used his feed to catch-up on what I missed.
This is a historically unique vantage point, for the first time allowing us to see past the posturing, the “commitment to our values,” the newly announced corporate social responsibility departments that made up the corporate playbook for responding to accusations of environmental or ethical neglect in the past.
2. It’s easier than ever to organize mass movements
Having lived and worked through the global #DeleteUber campaign, I remain in awe of the internet’s unique ability to bring people together behind a common objective.
These forces, once unleashed, are hard to control — and can certainly be misguided. But there’s no denying that they have forced organizational leaders to become increasingly mindful of the potential for stakeholders to foment seismic movements that reach far into the customer base to do real damage to the bottom line.
3. Companies are beginning to fight regulators for what’s right
In the 1980s, when Reagan implemented a variety of regressive environmental policies, corporate America embraced them with open arms. This time, large companies are fighting on the side of sustainability, even against their own short-term self-interest. Patagonia, for instance, announced a plan to give $10 million, the full refund from a federal tax cut it called “irresponsible,” to fight for environmental causes threatened by the tax cut itself.
And whether companies do it because they’re afraid to lose customers or for authentic ethical reasons is exactly the point — what’s unique is that companies don’t have to be bastions of morality to do what’s right, but simply have good business sense.
As the Stanford Social Innovation Review put it:
Some of the backlash this time will come from businesses that are leading on greenhouse gas reductions and not fighting government-led environmental policies, as they did in the 1980s. Indeed, recent surveys show that 85 percent of business executives believe that climate change is real (well above the national average of 64 percent), and many see the associated market risks and benefits.
What does this mean in practice? It means businesses are facing mounting financial, societal, and internal pressure to behave in accordance with ethical and environmental principles.
The financial pressure
A paper published by the Institute for Operations Research and the Management Sciences sampled 28,578 firm-years, with each firm assessed on its performance in “community, diversity, employee relations, environment, product, and human rights attributes.” The findings show an undeniable correlation between companies choosing to engage in corporate social responsibility with higher profit margins and valuations.
We see this time and again. Companies that make Ethisphere’s World’s Most Ethical Companies list consistently outperform the S&P 500. A composite index of JUST Capital’s 2016 rankings of ethical companies consistently outperformed the Russell 1000 on a 10-year basis.
Beyond profitability, a slew of companies are realizing that responsible operations are simply paramount to their ability to exist in the future — not just the right thing to do.
There are a variety of possible underlying factors: companies that act with integrity have lower long-term customer retention costs, it’s easier to attract top talent, voluntary employee churn is lower, and there are fewer costs associated with lawsuits and fines.
But even without isolating the specific causes, progressive business leaders are recognizing the implications of this fundamental truth. A recent survey of CEOs found 90% believe sustainability is important to their companies’ business success. Goldman just announced they will not take any companies with nondiverse boards public, explicitly citing data that companies with diverse boards perform better financially.
Beyond profitability, a slew of companies are realizing that responsible operations are simply paramount to their ability to exist in the future — not just the right thing to do. Nestlé, Coca-Cola, Cargill, and General Mills, for instance, have made substantial investments in the environmental sustainability of their operations in the face of threats to their value chain due to the decreased availability of clean water and the fallout from climate change-related events.
The internal pressure
By 2025, millennials and Gen Z will make up more than 75% of the workforce. These are the same groups that cited “seeking out employment at companies that demonstrate a commitment to responsibility” as a top priority. A 2016 study showed that employees — particularly millennials — increasingly expect their employers to share their values, something that was not a serious consideration for most employees until relatively recently.
These attitudes manifest in a sharp rise in employee activism, forcing even the most apathetic CEOs to seriously consider workers’ opinions when making major corporate decisions.
While a small number of companies integrated social purpose from inception, many added it to their values and practices in the 2010s.
Whether it’s McKinsey employees pressuring management to stop working with U.S. Immigration and Customs Enforcement (ICE), Nike removing top execs accused of sexual harassment in response to a revolt by a group of female employees, or Google canceling military contracts in response to large-scale walkouts and sit-ins, today’s level of employee activism (at least in its current form) is almost without precedence in history.
As millennials and Gen Z grow as a portion of the workforce, employers of the 2020s will feel more, not less, responsible for making business decisions that align with the values of their employees.
Crossing the chasm
Conscious corporatism is finally “crossing the chasm,” a framework used to describe how a product or concept goes mainstream. This, according to Geoffrey Moore’s classic formulation, takes place when a product crosses the gap between the early market (innovators, early adopters) and the mainstream market (the broader pool of consumers).
Each consecutive audience is a little harder to crack. Whereas innovators are willing to try new things, take risks, pay a premium for first dibs, and have relatively low expectations, the early majority expect high quality and demand a competitive offering. Conquering the early majority represents the mainstream-ization of a product or concept.
In the 2010s, conscious corporatism moved from the innovators to the early adopters. In the 2020s, it will conquer the early majority too.
The innovators are the social-purpose “natives,” companies founded with it in their DNA and who’ve become emblematic for the movement writ large.
Patagonia is the poster child here. They commit 1% of sales every year to environmental purposes, give employees paid time off to volunteer, ask customers to “buy only what they need and repair it when it breaks,” and actively lobby in favor of social causes (like the Public Lands campaign in headline image). Unsurprisingly, perhaps, their mission statement is: “We’re in business to save the planet.”
At their best, innovators like Patagonia help promote new models of both production and consumption.
The early adopters
While a small number of companies integrated social purpose from inception, many added it to their values and practices in the 2010s. These “social purpose immigrants,” as HBR calls them, recognized the economic importance of competing not just on functionality, but on corporate citizenship as well. In my eyes, these are the early adopters.
The list here is long, but just to name a few:
- Several big box retailers, including Dick’s Sporting Goods, Kroger, and Walmart responded to mass shootings by restricting their sales of guns.
- In response to immigration policies implemented by the Trump administration, American, United, and Frontier Airlines refused to knowingly fly children separated from their parents at the border.
- To curb plastic pollution, Adidas began manufacturing shoes made out of ocean plastic.
A noticeable shift
These changes aren’t simply limited to a handful of cases of large corporations who can afford to make the sacrifices perceived to be associated with running a business with integrity. The 2010s marked the beginnings of a shift in good corporate citizenship toward the mainstream.
Over 13,000 companies worldwide have signed the UN’s Global Compact, which sets standards for members “to align strategies and operations with universal principles on human rights, labour, environment, and anti-corruption, and take actions that advance societal goals.”
Deloitte’s 2019 Global Human Capital Trends report showed that, “44 percent of business and HR leaders said social enterprise issues are more important to their organizations than they were three years ago, and 56 percent expect them to be even more important three years from now.”
Another survey by Deloitte served to a range of C-level execs found that “73 percent said their organizations had changed or developed products or services in the past year to generate positive societal impact.”
In 2018, the vast majority of S&P companies (86%) voluntarily released sustainability reports, a huge jump from the 20% that did so a mere seven years prior. Along similar lines, the number of certified B Corps — companies that meet rigorous ethical, social, and environmental standards — has skyrocketed over the last decade.
We’re also seeing industry-wide transformations like what’s happening with the electric vehicle industry. Tesla’s Roadster was the harbinger of the electric revolution in 2008, targeting a slightly eccentric, tech-y, mega-rich audience. In the 2010s, practically every single auto manufacturer released its own electric vehicle or began serious R&D in producing electric vehicles in an effort to catch up to the new normal.
Data shows that today’s younger generations look to regulatory bodies less and less for solutions to societal and environmental issues. Almost three quarters of millennials said in a recent survey that political leaders are failing to have a positive impact on the world.
In this vacuum of trust, consumers have begun to realize the power of their own wallet in affecting change.
So while governments will certainly play a role over the coming years, there’s no stakeholder better equipped to push through fundamental change like businesses responding to an increasingly empowered consumer.
And the truth is, that’s a good thing.
In today’s market-led world, businesses are responsible for arranging the world around us: our houses, food, cars, experiences, and so on. That means that, although enterprises aren’t solely responsible for transforming society, they do have the tools, resources, and global reach to generate the solutions we need at the scale and speed we need them — in the way few governments do.
This piece was originally published in That Damn Optimist.