Published at 2017, September 25th
What if Generation Y was able to transform the global business world and get it “on the right side”? How will the new expectations of these young and digital consumers influence companies and move them towards more responsible, fairer, more environmentally and socially responsible business models? Let’s take a closer look at these questions.
Generation Y will soon take power. They are arriving slowly in the labor market and starting to seek positions of responsibility. They represent a growing share of global consumers, workers and voters.
But this generation wants to be different from those that preceded it in many areas. They’re more open, more mobile, more connected, more diverse… And the truth is that Generation Y is already transforming the world. Millennials, as they are called, are the generation of nomadic workers and telecommuters, the digital generation of connected objects and startups. They are the generation of collaborative economics, uberization, and self-employment.
But going even deeper, Generation Y may also be the one that will finally transform businesses and make them transition to the right side: that of, for instance, sustainable development, transparency or social justice. They may be the ones making businesses contribute to a fairer, more equitable world . one guided by something other than profit alone. This is, in any case, what is increasingly suggested by surveys conducted with this unique Generation.
Generation Y: The Generation Of Sustainable Enterprises
Young people born in the 1980’s and 1990’s will be the first generation of adults to face the concrete consequences of global warming. They will suffer the consequences of climate change on the planet and the weather; they will suffer the consequences of global warming on companies, but also on society in general. They will be the first to lose money and comfort of living due to global warming caused by previous generations. They will bear the brunt of the health consequences of air pollution, the increase of social inequalities, political and economic crises …
For all these reasons, Generation Y appears more sensitive than others to issues of sustainable development, ethics, and social justice. Young people born after the 1980’s (according to a poll conducted by the White House Economic Advisors) are more likely to want to help improve society than the previous generations. With 84% of them making donations to charities, they invest in philanthropic causes more regularly than their elders.
They want to change their society, change their way of life, and they obviously place their expectations on businesses. And that might well push the latter to change, at last. According to a survey conducted by Global Tolerance, 62% of young people want to work only “for companies and organizations that seek to deliver a positive environmental and social impact”. They would be 84% who consider a company’s sustainable development policy as an essential purchasing criterion. Millennials are now looking for companies that make an effort to protect the environment, reduce their greenhouse gas emissions, and promote ethics and equity. And 75% of Generation Y’s young people consider it important for a company to “pay its debt to society”.
Today, these new types of consumers account for a quarter of the world’s population and nearly $ 200 billion in annual purchasing power, with purchasing power expected to grow: by 2030, millennials will account for 75% of the active working population in the world. It is therefore this new audience that brands need to seduce. But in order to seduce them, they will have to transform. In fact, only 1% of millennials are influenced by traditional advertising and marketing.
Businesses will therefore have to find new ways to attract the favors of these demanding consumers. Generation Y reads blogs and social networks before buying (33% of young people say they are mainly influenced by blogs for their news and their purchases) and is not influenced by the traditional media (TV, newspapers, radio…). To stand out and attract these young people, companies will have to show what they do best. They will have to develop their “reputation” but not only for the quality of their products or their ability to innovate. What will count now is their reputation in social, environmental, or ethical areas, or customer relations.
Necessarily, companies that want to reach these young people will have to make efforts and become greener, fairer and more ethical. Out of necessity, this will force companies to seriously address social and environmental issues. And all this should help make the business world (a little bit) better.
Generation Y: Transparency And Authenticity
Millennials are also waiting for companies to transform their modes of communication. They expect more transparency: 43% of young people consider that the authenticity of a brand is more important than the content it communicates. If they do not trust a brand, they do not even bother to read or watch the message it is broadcasting. 62% of digital natives say they want to engage directly with brands on social networks, in a more direct and transparent way, without going through the traditional corporate channels such as advertising and marketing. They want a more personal relationship with their brands.
Communication with the young people of generation Y will therefore be more horizontal, direct, and co-constructed. 42% of millennials want to play a stronger role in the co-construction of the products they buy: they want to offer their opinion, give feedback, have a role and a view into the entire production process, and know what it is they are buying … From now on, companies will no longer be able to maintain a climate of permanent opacity around their production processes: they must be clear about what they put in their products, how these products are manufactured, and the conditions of sale. Businesses like Volkswagen are already showing the beginning of this trend: when a company is lying or hiding information from its consumers, its reputation and performance are affected almost immediately.
Faced with consumers who are increasingly “players”, companies will consequently have to open up, become more flexible and transparent.
Generation Y and Investment for a Sustainable Society
Finally, Generation Y will not give its money to just anyone: it will be an investment that makes sense. According to Accenture, younger generations will inherit at least $ 30 billion from their parents in the United States alone by 2030. With these assets, they could become investors. And again, Generation Y will change the situation: according to a study conducted by Spectrem Group, 45% of the millennials with capital would like to be able to use it to help others and society. 67% would consider investing to be a reflection of their social, political and environmental values.
When millennials begin to invest in finance and the stock market, it will no longer be the large profit-oriented companies that will attract their investments. On the contrary, Generation Y will invest its capital in companies that match their commitment and are more responsible, sustainable, and fairer. It is a safe bet that, tomorrow, it will no longer be only stock prices that will decide the financial future of companies, but also their ability to promote positive actions that they carry out on a daily basis.
Soon, the societal commitment of companies will become a criterion for obtaining financing and to attract capital. The trend has already begun: at present, asset managers, pension funds, and financial actors in general are increasingly turning to socially responsible investment (SRI). Assets in this type of investment are still far from reaching the amounts that are known in finance in general, but the trend is there: 21 billion in assets in 2014, 62% more than in 2012. And the more of Generation Y who has assets, the more this trend will continue. Ultimately, millennials could also push finance to become “responsible”.
The business world is therefore perhaps in a pivotal period, a period of transition. Companies will have to transform themselves in the face of the emergence of a generation that demands a real change in model. Generation Y is a bearer of hope: the hope that soon the divide between companies and society will be reduced, that all economic and social actors will be able to co-construct a better and more sustainable society. Will these hopes lead to a real revolution in the business world? Only the future will tell, but one thing is certain: some transformations have already begun!