In the 2018 BSR/GlobeScan State of Sustainable Business survey, we learned that corporate reputation remains the number one driver of sustainability efforts at BSR member companies. Consumer/customer demand came in second; yet many sustainability leaders believe there is room for improvement in their communications about their sustainability efforts to these groups.
Investments in more sustainable products and a more coherent sustainability narrative are likely to pay increasing dividends: As millennials (born between 1981 and 1996) and Generation Z (born between 1996 and 2011) become a more and more influential consumer group and employee demographic, the demand for sustainability is likely to increase.
An entire blog post—and then some—could be written about the differences between these two generations. Yet many of the business implications of their increasing influence are the same.
Specifically, these two groups, more than older generations, highly value two things:
- Meaningful work
- Products that align with their values
As millennials and Generation Z become a more and more influential consumer group and employee demographic, the demand for sustainability and purpose is likely to increase.
This presents major opportunities for sustainable business. Here are two ways that you can realize them.
1. Invest in and communicate about your sustainability programs to support employees’ desire for meaningful work.
Study after study has shown that purpose is what both attracts and keeps younger workers. This is a huge opportunity for companies that are hoping to hire and retain the next generation of talent: Millennials became the largest generation in the labor force in 2016, and they will make up 75 percent of the global workforce in 2025.
Unfortunately, only a minority of millennials believe that businesses behave ethically and business leaders are committed to helping improve society, the 2018 Deloitte Millennials study found. Gen Z and Millennials both cited “being a good employer” as the number one CSR issue they care about, consistent with the general population, but more than older generations, they seek out employment at companies that demonstrate a commitment to responsibility.
In one survey, three quarters of millennials indicated they consider a company’s social and environmental commitments in deciding where to work, and two thirds said they would not accept a job somewhere without a strong sustainability program.
We learned in the BSR/Globescan survey that although many companies speak about employee engagement and recruitment as a primary benefit of sustainability efforts, less than 20 percent of company respondents saw it as a top-three driver of their programs.
However, some companies, like Workday, are investing in becoming desirable places to work for younger employees. Millennials make up 53 percent of Workday's almost 9,000 employees today. The company has “anchored its culture in research on generational differences,” which has included creating career development opportunities for employees, collecting data on employee engagement, building green teams, and placing a high priority on a giving its people a sense of purpose.
This appears to be paying dividends. The organization, ranked fourth on the 2018 “100 Best Workplaces for Millennials” list, has reported 35 percent revenue growth over the past three fiscal years and an 80 percent retention rate for its new-hire program for recent college grads.
2. Take a position on social and environmental issues—and make sure it’s consistent with your actions.
In a recent LIM College study, almost 90 percent of respondents agreed, “Millennials and Gen Z will help create more sustainably-produced products by convincing businesses and governments to alter existing practices.” In other words, these consumers are creating demand for sustainable products, from clothing to home goods to cars.
Moreover, Cone Communications found that Gen Z, which will account for 40 percent of all consumers globally by 2020, is the generation most likely to believe that companies should address urgent social and environmental issues: 94 percent of those surveyed said so (compared to 87 percent of millennials).
This isn’t limited to products, either. It also applies to a brand’s approach to social justice issues. As synthesized in a recent issue of Above the Bottom Line, FleischmanHillard’s latest research reveals that two thirds of U.S. consumers and 80 percent of U.K. consumers say they have stopped using products or services because the company’s response to a certain issue doesn’t align with their views.
The same research suggests that approximately 60 percent of consumers expect companies to speak up on important issues, even if those same consumers don’t agree with the companies’ positions—and this is true for 75 percent of millennials.
As millennials and Gen Z make up a larger and larger proportion of consumers around the globe, companies will increasingly need to be prepared to take a position on social debates and back it up with action.
It’s worth noting, however, that our recent Polecat research suggests that consistency in public policy efforts and overall positioning isn’t only important for people born after 1981: This issue ranked second as a priority for the public overall in our scan of social media conversations.
Millennials and Gen Z are already changing what is expected of business, and resilient companies are addressing this reality now through investments in sustainability, integrity, and advocacy.
If you’re interested in hearing about the future of sustainable business directly from a few of the millennial leaders who will bring it to life, join us at the BSR Conference 2018 in New York City November 6-8.