COVID-19 has led to an intensification of people’s attitudes toward many social and environmental matters. The ways in which the pandemic has exposed issues like income disparity, racial division, and the consequences of human impact on the environment, are motivating more people to take change into their own hands.
This creates a new choice for organizations across industries – that it is no longer enough to remain neutral on society’s most important issues. Many of their stakeholders expect them to become instruments for positive change. This is a major challenge, since many businesses have deeply ingrained cautious tendencies, built from years of practice steering clear of potentially controversial social and environmental issues.
Getting out of the way of issues won’t work.
To help businesses understand the changing trends in public opinion and activism, Deloitte conducted research across 10,000 people in six developed countries, entitled the Get Out In Front report. The goal of the report was to identify the extent to which stakeholders are demanding change, so companies can gain a clearer understanding of how they too must change.
Key Trends in Activism
The Get Out In Front study showed how COVID-19 has caused more people to become actively involved in issues they care about. 40% of respondents indicated that the pandemic has made them more likely to be engaged in social issues than they were before the pandemic. When asked which issues are most important to them, climate change (reducing carbon emissions) was the top response, followed by global change (reducing crime), and growth and consumption (reducing poverty and wealth inequality).
When respondents were asked how they felt emotionally about each of these issues, the top answer across all three of them was “anxiety,” but “optimism” was among the top-three answers for all of them as well. This would seem to indicate that people believe climate change, global change, and growth and consumption are solvable problems – but it is also important to understand how emotion (anxiety) is driving people’s engagement with these issues. It stands to reason that emotion will also drive how they engage with brands – which further highlights the need for organizations to embrace issues and values that are important to their stakeholders.
Many survey respondents indicated they had made changes in their own lives to address these pressing issues. For example:
Consistent with these findings, consumers indicated they expect companies to make changes that address these issues – and that the old “CSR playbook” of donations and volunteerism is no longer sufficient to meet their expectations.
58% of survey respondents said they want organizations to change their business practices rather than just donate money. And, among consumer companies, 65% of stakeholders expect CEOs to do more on these issues.
The Transformation to Responsible Business
In one aspect, many companies are experiencing a natural transition toward becoming more activist. Younger CEOs today grew up in a world that was different from their baby boomer and Gen X predecessors. These CEOs came of age amid the growing climate change crisis, social upheavals like the Arab Spring, and societal shifts toward inclusion and diversity. They are much more likely to embrace the trend toward adopting environmental, social and governance (ESG) strategies than those who entered the workforce during the more profit-driven culture of the 1980s and 90s.
Likewise, investors are causing companies to focus more intensely on ESG. According to a study by FTSE Russell, more than half of global asset managers are “implementing or evaluating ESG considerations in their investment strategy.” ESG has become an increasingly important component to companies’ ability (or inability) to access financial markets.
Perhaps the most notable force in the growth of corporate activism is the demographics of customers. Just like how younger CEOs tend to be more activist than their elders, younger customers are also more activist. The Get Out In Front report found that 18-to-25 year-olds are three times more likely to switch brands based on values than people 65-or-older.
This is both an opportunity and a warning for companies. This younger generation will become the dominant commercial demographic in a few years – so the time is now to get out in front. The Get Out in Front report portrays a world moving to a values-based economy, where business and purchasing decisions will increasingly be based on the values associated with brands. In a world where activism becomes the norm, companies will need to have the courage and conviction to place bets on what they are going to stand for. This can be a daunting challenge, because most forms of enterprise risk are quantifiable – but acting in line with corporate purpose and values is far less precise. Stand up for what you stand for.
However, this challenge must be met: The Get Out in Front study indicates that in the growing values-based economy, sitting on the sidelines could see you left behind in the race for customers, talent and investment.