Millennials: The ‘800 Pound Gorillas’ of Social Responsibility
In 2013, 50% of global consumers surveyed said they were willing to pay more for products from socially responsible companies. Respondents under age 30 – millennials – were the most likely to say they would spend more for goods and services from companies who give back.
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In 2013, 50% of global consumers surveyed said they were willing to pay more for products from socially responsible companies. Respondents under age 30 – millennials – were the most likely to say they would spend more for goods and services from companies who give back. The success of Tom’s Shoes is a great example of this concept in action:millennial customers are happy to pay a premium for Tom’s Shoes and accessory products because they know their money is being used to give back.
Because I’m a millennial (a.k.a. Generation Y), it makes sense to talk in the “first person.” There is a lot of discussion about ourgeneration: our buying power, ideals, work ethic, and social influence. Every week there is a new article about how lazy, idealistic, and entitled millennials are (often called the “Me, Me, Me” generation). Then on the next page of that same publication, there’s an article about how our generation is going to “save us all” and how millennials have “taken over the American work force.”
Whatever the case may be, it’s obvious that millennials wield significant buying power – expected to reach $200 billion in spending by 2017 as the largest generation in US History. It’s also pretty safe to say that millennials are dangerously effective at utilizing technology and social networks to share ideas – both in the work place, and in their private pursuits. Our generation was the first to “come of age” with Cable TV, the internet, and easy access to cell phones. We’ve been connected to technology our whole lives – which connects us to world events, political topics, and other things we might otherwise have no clue about. This is a big reason why transparency in business is so important to millennials – it’s virtually impossible to get away with shady business ethics or damaging the environment as a company (without some savvy millennial finding out about it, and making it go viral).
While small and large companies alike are fumbling to make this massive segment happy, one overarching theme keeps coming to the surface over, and over again: millennials demand social responsibility from business. In a Washington Post article, writer Michelle Nunn said that social responsibility “isn’t optional” to millennials. Andrew Swinand of Chicago Business said that “corporate social responsibility is millennials’ new religion.”
Corporate Social Responsibility (CSR) can be loosely defined as a business management concept that integrates social and environmental concerns into everyday business operations. It’s an incredibly broad topic – covering everything from sustainable manufacturing methods, to safe ingredients, to ethical treatment of employees and members of the supply chain.
With all this buzz about CSR and the growing, charitable hearts of millennial consumers, you would think that it would be easy to locate and support organizations who give back. But it’s not. In a 2015 Consumer Consciousness study performed by Good Must Grow, only 28% of people surveyed were able to name a socially responsible company. Most people have no idea that Starbucks supports job training for military veterans, or that UPS works with the Boy’s and Girl’s Club of America in addition to its cash contributions to charity.
Participants in this same study cited “knowledge” as the number one obstacle that prevents them from doing more good. It seems that even though buzzwords like “millennial” and “corporate social responsibility” are being tossed around every business news publication, there is a lack of access and information about WHICH brands to support, and HOW to support them.While there is definitely evidence of consumers factoring social responsibility into their purchasing decisions, there is room to improve how sellers, buyers, and brand participants of social causes come together.
Two other ways that millennials are influencing CSR business trends is through employment decisions and investment decisions.A study conductedby Cone Millennial Cause group found that 80% of 13-25 year olds (in an 1800 person sample) wanted to work for a socially responsible company. Also, more than half said they would refuse to work for an irresponsible company. This is substantial – and even more so when you consider that millennials will account for 50% of the workforce by 2020, according to a study by The 2020 Workplace.
From a recruiting standpoint, it makes good sense for companies to build a CSR strategy in order to attract top millennial talent, but the influence doesn’t stop there. Impact Investing refers to investments made into organizations with the intent of producing a beneficial societal or environmental impact, alongside a financial return. Impact Investing is not only growing in popularity, but is showing impressive return results versus traditional stock investments. With companies like Jessica Alba’s Honest Company leading the way, investors are taking cause-centric companies seriously. The Honest Company, a baby and personal care products company that contributes to multiple societal and environmental causes, was valued at $1 billion in early 2015.
Millennials are dramatically accelerating the growth of this industry, and experts in the field are taking note of it. In a study conducted by the Spectrem Group, 45% of wealthy millennials said they consider social responsibility a major factor when considering investment decisions. And despite a skeptical approach to the stock market, millennials are willing to accept more risk and receive lower returns if the companies they invest in are creating a positive impact.
Companies aren’t just contributing to society because it’s the “right thing to do” (maybe a few do…) – they are doing it because it is a sound financial investment in order to attract talented millennial employees, savvy millennial shoppers, and millennial investors with growing pocketbooks. It makes financial sense to invest in CSR. That’s a solid indicator that “doing good” in business will continue to grow.
It’s clear that shoppers want to support products and brands that are cause-centric, but they are not always successful in locating them. Accessibility and knowledge are still huge obstacles to overcome. Much like the Organic Shopping industry did in 2002, the Socially Responsible Shopping industry could be poised to explode over the next few years.
In the case of the culinary and food marketing buzzword “organic,” consumers demanded this option from food and personal care item brands – but it didn’t explode until regulatory and commercial support joined forces. In 2002, the USDA released its national standards for organic products. By the end of 2003, organic foods were available in around 20,000 natural food stores and 73% of grocery stores, with big name retailers like Whole Foods leading the way. Fast-forward to 2015, and US consumers are spending $39 billion annually on organic products (food and other). The organic shopping movement was the result of a perfect storm: consumer demand, regulatory support, retail leaders, and intimate engagement with consumers via social media. Smart retailers understand that millennials expect to have direct access to companies through Social Media, and leverage that platform to engage and educate followers. This kind of direct, consistent contact further fueled the organic shopping movement, providing information and resources that were not as easily accessed prior to 2002.
Could “socially responsible” be the next “organic”? It’s tough to imagine a socially responsible aisle in your grocery store because it’s such as broad and ambiguous concept. While some consumers are specifically passionate about one element of CSR – such as labor laws or environmental impact – the concept is just too broad to sum up with one word, or one two-word phrase.
However – the B Corp Organization model does a nice job of summing up a company’s societal impact on multiple levels. Short for Benefit Corporation, a B-Corporation is a type of for-profit entity that includes positive societal and environmental impact in addition to profit as its legally defined goals. Becoming a B-Corp is no easy task. In order to qualify, a company must adhere to a strict set of standards around fair wages for employees, charitable giving, financial reporting, and many MANY other criteria.
Why would a company go through so much pain for the B status? Ask a millennial. The B-Corp is the ultimate stamp of approval for millennials, illustrating a philanthropic company core and potential for millennials to be part of something impactful. It gives businesses a leg up on competition in terms of attracting millennial customers, employees, and investors. Today, the B-Corp is growing in international popularity, with more than 1,000 Certified B Corps from 33 countries and over 60 industries.Some B-Corps you may recognize – though you might not have known they were structured as Benefit Corporations – are Etsy, Patagonia, and Egg.
While organizing as a B-Corp is a great investment, it might not make sense for each individual company – or for a company that is in an early growth stage. That doesn’t mean social responsibility can’t be infused into the founding principles of the company, or embedded in the company’s mission. Even without a B-Corp status, businesses can benefit from being transparent with their missions, resources, goals, and financial information.
In order to capitalize on the growing trends of CSR in business and gain access to millennials, companies must have a visible social responsibility strategy. While it’s important now, it will be even more vital to thriving in the millennial market in years to come. It won’t be good enough to tack on a CSR campaign at the end of the year. CSR will need to be infused into the DNA of the company’s mission and business model. This opens up a whole new avenue for innovation: building companies to solve specific societal problems. While we’ve seen this business concept in action with theformation and success of companies like Tom’s Shoes and the Honest Company, the upward trend of cause-centric companies shows no signs of slowing down.
I joined SanaSana as Director of Ecommerce in late 2013. At that time there was no website, vendor relationships, or even a defined business model – only a mission, and a vision. Our Mission of helping orphanages in Latin America and creating a socially responsible market place was in existence BEFORE the actual business model. It was our guiding light in developing our initial business plan, and evolving the model to have a greater impact.
Instead of supplementing a business with cause-centric strategy, we created the cause-centric strategy first. This makes us more agile, focused, and purposeful. Our philanthropic efforts are not just “lip service,” and we don’t have the luxury of being socially responsible only when it is convenient. Many companies decide to create a purposeful mission after a business has been created, with the noble goal of aligning company actions with core principles. The difference is that we could reinvent SanaSana’s business model tomorrow, completely disrupting how we operate, and still have a solid blueprint to guide our development.
After seeing the evolution of SanaSana, the value of this structure is clear to me: every decision we have made since the conception of SanaSana has been based on the mission – not the business model or revenue streams. For example, after partnering with Wix.com to donate websites for orphanages in Latin America, we recognized another problem: online shoppers were often unable to find ways to give back that didn’t require their time or money. While staying grounded in our original mission of helping orphanages in Latin America, we created the Crowd Cause Shopping model – effectively involving our shoppers in the donation process without asking them for donations. The innovation of Crowd Cause Shopping was not in spite of our charitable mission, but was inspired by our mission.
For most food, supplement, or health related companies – “organic” is a major focus for product innovation and accessing health-conscious consumers. It’s not just a marketing strategy any more, but a survival strategy due to the overwhelming demand for organic foods, beauty products and other personal care items. In the same way, having a Corporate Social Responsibility strategy is a good idea from a recruiting, customer acquisition/retention, and investment standpoint. In the near future, it will be more than just a “good idea” and a savvy marketing strategy. It will be necessary for survival.
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