Millennials want businesses to be more socially responsible

Carol Adams is Professor of Accounting at Durham University Business School and also the author of The Sustainable Development Goals, Integrated Thinking and the Integrated Report.

Whether it is climate change, gender inequality, poverty or environmental issues – young people, millennials in particular, are more concerned with these matters and tackling them compared to previous generations. In fact, the World Economic Forum’s 2017 Global Shaper Survey, which retrieved answers from 31,000 millennials across 186 different countries, found that young people considered climate change to be the world’s most serious issue which needed addressing, ahead of government corruption, large conflicts/ wars, lack of infrastructure and so on.

This is something that has been reflected by millennials’ working practices also. Young people are not just concerned about these key issues – many of them want to only invest in and work for companies that are making a positive contribution to addressing them. A 2016 study by Cone Communications into millennial employee engagement actually found that nearly two-thirds (64%) of millennials won’t take a job if a potential employer doesn’t have strong corporate social responsibility practices.

This is a trend seen in the business school world too, with more and more schools implementing courses and electives focusing on ethics, sustainability and the environment. This is not only a response to the wants of millennial students, who are actively looking for courses which teach these skills, but also an attempt by business schools to shape the future of leaders of tomorrow to be more socially responsible and ethical. In fact, Durham University Business School has recently been recognised for this, finishing in the top 30 business schools globally for sustainability in the Corporate Knights Better World MBA Ranking 2018.

Young people want a fairer society and to work in a manner which enables them to continue to enjoy the world’s natural environment and resources, whilst also seeking to have a healthy retirement income. Some may say that these two wants are mutually exclusive – but, they are not. In fact, many people, including long-term investors, now recognise that the two go hand-in-hand as companies will not prosper long-term unless they attempt to address issues such as climate change and inequality through their business practices. It is not only good for a business reputation-wise, but financially too.

One investment organisation that has really taken the lead both in responsible investment initiatives and transparency of their efforts is Cbus Superannuation Fund. Their Annual Integrated Report 2017 includes a timeline showing how their focus on being a responsible investor has increased over a relatively short period of time. They began to incorporate Environmental, Social and Governance (ESG) issues into fund manager and investment manager agreements in 2002 and appointed their first ESG manager in 2009. Then in 2017, with a responsible investment team in place, they publicly supported the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) and set about developing an active engagement and investment strategy to contribute to the Sustainable Development Goals (SDGs) set out by the UN.

The Funds’ CEO saw a connection between a long-term focus, the Fund’s leadership in responsible investment and integrated reporting. Over the years I have worked with the firm Fund on integrated reporting and the integrated thinking that goes with it, I’ve seen a significant shift in the extent to which responsible investment and social and environmental issues have been incorporated into strategy through integrated thinking.

Integrated reporting has clearly articulated that their longterm value to members goes beyond being one of the top performing funds in Australia in terms of returns. Everything they do is driven by members’ needs, including advocacy work. But beyond that, it is natural to them that this extends to considering human rights, labour rights, climate change and a range of other issues as relevant to their members’ long-term interests.

Apart from benefiting from a more focused strategic framework through defining value and recognising the importance of multiple capitals (not just financial capital), the Cbus team have won the best reporting award from the Australian Institute of Superannuation Trustees (AIST) and were one of 12 reports awarded or commended from 2,500 reviewed by Responsible Investor this year – a great example of how investors can really drive change.

When I wrote The Sustainable Development Goals, Integrated Thinking and the Integrated Report, I had investors, as well as companies, firmly in mind. Investors have the power and the means not simply to switch where their money is invested, but to influence the activities and business models of those they invest in. Investors can call on the companies they invest in to identify the SDGs which they make a material contribution to in a way which is aligned with their own strategy to create value. Addressing matters such as climate change and other sustainable development issues is clearly in the interests of long-term investors.