Some experts say young people have adopted a new approach to consumerism, one that can see through false attempts at ethical or sustainable behavior—and it could already be showing up at the stock market and on the bottom line.
As the fashion industry moves closer to a world in which a brand’s purpose is of equal importance to what it sells, it is no longer optional to participate in the ethical marketplace, senior industry advisor and The NPD Group vice president Matt Powell proclaimed in his most recent “Sneakernomics” blog post.
This was a product of consumers placing more stock in businesses and brands in the face of government let-down, Powell said. According to the 2019 Edelman Trust Barometer survey, 76 percent of its respondents claimed it’s the CEO’s responsibility to “take the lead on change” as opposed to the government. Most of those also agreed that CEOs can make a difference on important social issues like equal pay, discrimination and environmental impacts.
Of those employed at a corporation, 71 percent also agreed that it is “critically important” for a CEO to respond meaningfully to challenging times.
“Millennials and Gen Z have both communicated their need to know brands’ values and they have high expectations on brands living their values,” Powell wrote. “They expect brands to have a positive impact on society and don’t believe brands can do that if they remain neutral.”
A good example of companies making change happen at the level of the average consumer, Powell said, was when several retailers decided to either not participate in Black Friday or donated the day’s proceeds, instead of becoming a part of the “weeks-long super holiday” that some say puts an undue burden on retail employees and their families.
Another example of this mindset: when Patagonia donated the $10 million tax break it received from the Trump administration to environmental groups instead of working it into the annual budget.
“An ethical company behaves in a moral and consistent manner, regardless of the outcome,” Powell wrote. “But more often than not, the outcome of ethical behavior is a positive one. A brand’s transparency on social issues is viewed positively by its core consumers. Doing good means doing well.”
Over the summer, The Business Roundtable, a non-profit composed of CEOs from major U.S. companies and a group typically engaged in the business of wealth creation, pledged “to lead their companies for the benefit of all stakeholders—customers, employees, suppliers, communities and shareholders.”
This strategy follows the groundwork set by organizations like B Lab, which created the B Corp certification to ensure that companies with the mark include every possible stakeholder, including society and the environment, into their business model—not just the bottom line.
The movement of organizations toward this methodology indicates not just that its the right thing to do but that it might actually make financial sense, Powell said. According to a Deloitte study published in 2019, companies that do not recognize the importance of transparency on environmental, social and governance (ESG) issues could lose investors, customers, employees and a competitive advantage.
Today, many investors look at a company’s ESG disclosures as closely as they look at financial information assessments, Deloitte said, “because performance on ESG metrics can affect financial performance.”
“Many companies still see ESG as just a fad that the young generations will discard as they age,” Powell wrote. “But it is clear that more than previous generations, young people are shopping with their values in mind.
“Companies cannot speak in platitudes, with a veneer of ethics,” he added. “Successful companies must fully accept and embrace the values of the new consumer.”