Millennials and Consumer Activism
Millennials [i] are the most likely generation to base the choice of brands they patronise on the business ethos of the brand. The younger generation increasingly expect business and companies to be value-driven, linked to social causes and express political values similar to theirs. This extends beyond buying behaviour and is also reflected in the investment decisions they make. In 2019, an Allianz Life ESG Investor Sentiment Study from 2019[ii] found that although only 17% of millennials actively investing in ESG (Environmental, Social & Governance) products. About 64% of them acknowledged that ESG issues were important to their investing decisions. By comparison, only 7% of Gen Xers[iii] and 3% Baby boomers[iv] considered ESG issues in making investment decisions.
For most millennial investors, the social issues considered are environmental and government policies in that order[v]. The effect of this new wave of consumer activism is inherently clear. As of 2018, over 50% of the S&P 500 companies have at least one person on their board whose job is to advise on social responsibility or environmental policy (in some cases, both) in comparison to 1990 where it was only 12%[vi].
The world over, consumer activism (led by millennials) is changing the landscape of business across industries. Rising demand for renewables threatens the oil industry and has almost extinguished the coal industry, with countries like Sweden experiencing a second year without burning coal[vii] (two years ahead of schedule). In the food industry, there is a push for consumption of local and seasonal food, a rising demand for plant protein and even lab grown meat, over concerns about the amount of water used in producing meat and dairy products. There are also concerns over the effect on the environment of the large amount of methane emitted by cows, as well as the quality of life of the animals in the dairy industry. The buying decisions of millennials are a force to be reckoned with and their choice of avenues for influencing change in corporate and industry practices include social media, boycotts, and protests.
Consumer activism assumes different forms including legal cases, whistleblowing and education and have existed for a long time. As consumer activism is on the rise on a global scale and at levels that have not been previously seen, the question is, what makes it so effective?
Thanks to social media, consumer activists are more interconnected than ever and are able to coordinate more effectively. They leverage social networks to prompt change across major organisations and their messages can travel around the world in an instant second. For example, in the first quarter of 2020, Facebook had a daily average of 1.73 billion post, an increase of 11% year-over-year[viii] and Twitter is estimated to have on average, around 6,000 tweets a second and 500 million tweets sent each day[ix].
The consumer of today has access to a wealth of information. A push for transparency from businesses means that more company information is available to the average consumer than ever. Coupled with this, news is extremely accessible and travels fast especially when it is bad news. Therefore, consumers look beyond ad-copy and expect the corporate values of a company or brand to be reflected by its business activity.
When investing, the value of your investment may rise or fall and there are no guarantees you will get back all the capital you have invested.
[i] People born between 1980 and 1995
[iii] People born between 1966 and 1980
[iv] People born between 1946 and 1964