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Why the average company is growing a conscience

A new wave of consumers with a conscience has put companies on notice: businesses big and small can no longer look away from harmful practices.

Younger generations, particularly Gen Z (born between 1997 and 2012), are taking a tough stance on companies that don’t take responsibility for the economic, social and environmental consequences of their activities.

A survey by Australian firm InSites Consulting found 63 per cent of Gen Z consumers are willing to pay more for brands that try to have a positive impact on society, while 39 per cent refuse to buy from non-sustainable brands.

The research found Gen Z’s main concerns including social inequality (37 per cent), racism (35 per cent) and the suppression and abuse of women (20 per cent).

These up-and-coming activist consumers are driving the uptake of corporate social responsibility (CSR) programs within companies. Also known as environmental, social and governance (ESG) initiatives, they have become a key focus for many businesses and are used to attract new talent and new consumer markets.

More than half (52 per cent) of Australian business leaders expect corporate responsibility to be an increased focus area for their business this year, J.P. Morgan’s inaugural Australia Business Leaders Outlook Survey found.

Businesses are taking greater social and environmental responsibility for their activites. Photo: Getty Images.

Sarah Downie, chief executive of the Shared Value Project, said a recent shift in values has accelerated social responsibility across the corporate landscape.

“As we see the social and environmental cost of not fixing big challenges, perhaps we care more and we think business has a role to play, we’re not ok with business taking an exploitative approach and we think businesses should be positively contributing,” she said.

“We also have a lot of information at our fingertrips so we can do some research into understanding business’ claims and we no longer have to rely on advertising or what they might want to tell us – we can dig a little deeper and have a look under the hood.

“And lastly, there’s a shift that’s coming from the investor and shareholder side. That as environmental risks are starting to prove costly to business and really starting to create quite significant material risks, as are employment practices and other social concerns, that pressure is coming from a whole different part of the equation as well which is changing the movement of capital and at the end of the day, money talks.”

Companies can no longer afford to ignore activist consumers: Sarah Downie.

Far from tokenistic efforts such as monthly tree planting or one-off community grants, businesses are pouring efforts into longterm programs in ways that integrate with their business purpose.

An example is the 10-year partnership between Insurance Australia Group and the Australian Red Cross, who have co-designed an app to prepare communities for unexpected events such as floods and bushfires.

Corporate social responsibility programs may prove costly to businesses to initiate, Downie said they pay off in the long run.

“If done well, in ways that are material to a business, they can absolutely be drivers of innovation and growth,” she said.

“Some of the short term wins can be in things like reputation brand or employee value proposition.

“And then some of the stronger profit drivers are probably things that are going to come in time as organisations truly unlock new markets or new customers, or other profit drivers of the business.”

Downie said a business’ motivation to do good is not as important as their commitment to do good.

“Some are saying they are doing it out of the goodness of the heart, others are absolutely scared,” she said.

“It doesn’t matter to me, to be honest, what the motivation is. As long as there’s genuine commitment to change.”

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