By Vincent Molinari
Millennials didn't see “Wall Street” when it was first released in 1987. Many were born years after its release, while those who were alive were either still in diapers or barely out of kindergarten. Most, however, are familiar with Gordon Gekko’s famous utterance that “greed is good,” and they know exactly what they think of that maxim.
In a survey conducted in October 2014, 75 percent of millennials polled said it was important for brands to give back to society. Socially conscious investments grew by $6 trillion between 1995 and 2014, and more than half of that growth came between 2012 and 2014.
With 67 percent of millennials considering their investments as expressions of their social, political and environmental values, it’s clear who is driving this growth.
This isn’t a more honest and caring generation than those who came before it; the core issue is transparency. Millennials have grown up in a world where technology and social media have made information abundant. If they want to learn about a company’s environmental credentials, then they need only to pull out their smartphones.
People are now empowered to find the truth, and companies need to recognize this in their business planning. So if you want to attract the millennial investor, you need to have the right credentials.
Millennials are too savvy for those gambits to work. Whether it be through responsible farming, providing proper working conditions in factories, or retrofitting offices with LED lighting and green technology, businesses need to earnestly engage with sustainability programs.
The cost of not doing so can be devastating. Both General Motors and Toyota have suffered for their corporate deceptions, and now Volkswagen is facing an uncertain future. In the wake of revelations that the company misled the public over its diesel emissions, share prices fell by 23 percent.
With a movie already on the production line, the possibility of an $18 billion fine from the EPA, and regulators investigating a second software irregularity, it will take a long time for Volkswagen to recover its positive brand image.
Most businesses are not guilty of such an egregious breach of trust, but to entice millennial investors, you need a record that is consistent and ethical.
The first is Unilever, which launched its Sustainable Living Plan in 2010. The company has set aside concerns about stock prices and quarterly reports and has committed to buying all of its agricultural raw materials from sustainable sources. Since then, it has invested heavily in improving sanitation in countries like India.
Accenture is another company going to great lengths to engage with the world beyond its shareholders. Since 2011, it has invested more than $220 million in helping people to gain the skills necessary to work and succeed, forming partnerships with charities like Concern Worldwide to fund conservation agriculture programs in Zambia and Malawi.
How can you follow this lead? Here are three ways to change your company and make it more attractive to millennial investors:
1. Deliver a transparent supply chain. People dig deep. You may have good business practices, a strong work environment and pay a fair wage, but if you’re buying goods and raw materials from others who don’t conduct themselves similarly, you’re open to the charge of hypocrisy. It’s no longer acceptable to be naïve about where such materials come from — as Nike and Apple executives have learned at their own expense.
Both companies have since gotten a handle on the problem, but wouldn’t it have been better to avoid the scandal in the first place? Exercise due diligence with your whole supply chain, and be completely transparent with customers and investors.
2. Employ a diverse workforce. While quotas are cumbersome and can be hindrances, there are no excuses for a lack of diversity in the workforce. This is not just about having the requisite number of women or people of color at management level, either. They should be present in your C-suite and in the boardroom.
Economists are projecting that by 2030, women will control two-thirds of America’s wealth. Can you afford to ignore them now?
3. Build trust into your organizational structure. Barbara Kimmel, executive director of Trust Across America, noted that “trustworthy organizations do not sacrifice profitability.” Accountability needs to start at the top. When it’s weaved into the DNA of the organization, it builds responsibility at the bottom, too.
There were people who criticized Toms Shoes’s one-for-one business model as little more than a marketing gimmick. Instead of trying to shut down such criticism or pretend it didn’t exist, CEO Blake Mycoskie acknowledged it and worked to improve the scheme. In 2013, he committed to producing a third of all the shoes the company donates in the countries that the giveaway program targets.
Offering a high rate of return isn’t enough to entice investors anymore. But if you can build trust and accountability into your organizational culture, millennials will sit up and take notice.
Image credit: Pixabay
Vincent Molinari is the co-founder and CEO of GATE Global Impact, a leading electronic marketplace platform that’s helping the world’s leading organizations to standardize and accelerate impact investing. Vincent is also a managing partner at Constellation Fin Tech, and he consults with members of Congress and regulatory agencies on issues related to capital markets, early-stage companies, and secondary market liquidity.