Impact Investing, an investment approach which aims to create both financial returns and actively measured positive impact, dominated recent conversations at the World Economic Forum, as governments, investors, institutions and corporations have become increasingly aware of social good as well as financial return as a measure of sustainable growth. This desire to measure both the financial return and positive social impact is indicative of a much larger movement, which we are witnessing across sectors, brands and consumers. And it is consumers who are driving this need for organisations to measure their social impact – increasing levels of economic power is concentrated amongst people who believe business must be focused on doing more than just turning a profit. More importantly, this movement is most evident amongst Millennials – 90% of whom are willing to switch to more socially and environmentally responsible brands. These same millennials are set to inherit USD $30 trillion over the coming years.
So why now? Why is this becoming increasingly prevalent? Over the last decade we have witnessed a return to more traditional values. Life is no longer about ‘having it all’ but increasingly about a more holistic perception of quality of life. This shift in mind set was triggered in part by the global financial crisis, when frugality became both a necessity and a way to enhance and enrich people’s life.
As the global economy fitfully recovers, this mind-set has become a permanent shift – people are realising that having more ‘stuff’ doesn’t necessarily make life better. Furthermore, put simply, ‘stuff’ is expensive – rather than spending our hard earned money on things we don’t need, we are looking elsewhere to enrich our lives. One central aspect of this is the impact that our actions have on society at large, and the legacy we are leaving for future generations. For increasing numbers of people, this idea of “doing the right thing” extends to the brands, companies and institutions we enter into relationships with. Whether that is a short term transaction or a longer term value exchange, people think in terms of goods /services AND good on one side of the transaction and money on the other.
Now, this is nothing new. Brands and organisations have been ‘doing good’ for decades – with charitable foundations, money donated and numerous green initiatives. In a great many instances, this social responsibility has been a “policy”, an add-on or an afterthought. After recent years of scandal, economic strife and the fall of high profile figureheads, consumers are looking for more than just an initiative, or a campaign – they are looking for lasting real impact. With the ability to demand transparency and a strong desire for companies and brands to show enduring commitments to the things that matter to them, people are increasingly drawn to brands that place social responsibility at the heart of what they do. Social good is increasingly the foundation upon which today’s strongest brands are built.
As audiences become increasingly receptive, there are brands that are already redefining the value exchange to ensure that both the financial transaction in exchange for the product/ service itself and the social exchange are one and the same. Warby Parker has championed a bigger benefit than just the product, positioning themselves as the cultured choice for the cultured mind AND donating free eyeglasses to those in need. Consumers buy the products because they share their values with the company – which is as important to the brand as the products themselves.
Young brands which start out with a social mission at the core are one thing, but large corporations are equally being expected to change their emphasis – “policies” and “initiatives” won’t do any more – and major corporations are increasingly recognising that they must place their social goals at the heart of their growth agenda, or at the very least be true to their purpose. CVS pharmacies in the US stopped selling cigarettes and in doing so aligned itself with its purpose ‘Helping people on a path to better health’. Unilever has made sustainability central to its growth plans right across the business. These decisions reflect an understanding that values must be reflected at the core, not at the periphery.
Millennials expect brands to ‘do good’, not just to make a profit. We believe that brands will increasingly need to incorporate a valued social goal right at the core of their proposition - reflecting the aspirations of consumers placing less and less trust in traditional institutions, and increasingly demanding that brands step up to the plate.
By Emma Godfrey, Brand Project Director at Added Value.
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