A quick look into Google Trends, which provides insight into the popularity of search terms on Google, reveals a heightened and sustained interest in Environmental and Social Governance (ESG) issues, with the number of global searches for terms related to the field almost tripling between 2020 and 2022.

In the wake of global events and conferences shining a spotlight on a variety of ESG issues in recent times, it is an increasingly important area for organisations. More and more, we're seeing businesses share ESG updates and goals – whether it's linked to a promise to enable and support diversity in hiring practices, or outlining how they plan to reach the Government's net zero targets.

With the bulk of daily ESG news coverage linked to financial and investment advice you could be forgiven for thinking that ESG policies are primarily being dictated solely by investors, but this is not the case. There is increasingly a heightened interest in ESG issues, evidenced by policy and social media – and because of the growing acceptance that businesses have a responsibility for people and the planet, as well as profit.

ESG trends, and organisational responses to them, are increasingly being shaped by shifting societal attitudes, including a lack of trust. Young people, with their ever-increasing use of social media platforms that allow them to amplify their voices and learn more from their peers, are a key driving force behind this shift in attitude.

However, a recent report[1] in the US highlighted a discrepancy between investors and a clear understanding of what ESG means with one-in-four misinterpreting the acronym as 'earnings, stock, growth'.

For organisations that want to see their ESG policies make a real difference to people and the planet, this suggests that the focus needs to be linked to citizen sentiment, consumer habits as well as investors and Government policy.

With Gen Z (those born between 1997 - 2012) soon to replace Millennials as the world's largest demographic, their attitude to ESG is powerful. This generation is proudly challenging ingrained 'norms' in a bid to shape a better future and society for the world they will inherit.

What does this mean for organisations?

Sentiment towards ESG is shifting globally with a more 'immediate' sense of action required to improve our society. Brands and organisations must be cognisant of this, and understand that investing in developing ESG strategies should be done simply because they are in a position to effect real change – and because it is the right thing to do.

Similarly, for organisations, Gen Z is becoming increasingly important. Not just as powerful consumers but also from a current and future workforce perspective. And, as arguably the most well-connected and influential generation, there is a clear trend within Gen Z towards increased awareness of an organisation's ESG credentials.

This awareness, combined with a willingness to act, means organisations that do not have ESG at the top of their agenda, must reassess this to ensure they remain relevant to this audience. Whether it's demanding authentic, clear communication on ESG practices or a commitment to key issues, Gen Z expects brands to take action.

'Tomorrow's World', our upcoming report into ESG trends and Gen Z, provides valuable insights into what makes Gen Z tick. Action-oriented, with practical advice for business leaders, the report looks into key drivers behind the generation's behaviour and the potential costs to organisations who fail to pay attention.

As many organisations strive to do good through meaningful ESG strategies, ensuring their approach resonates with younger audiences can be challenging, especially when the more attentive Gen Zs have coined the term 'Environment and Social Greenwashing'. Here, we set out some of the key actions from our report for businesses to consider as Gen Z enters the workforce and becomes our largest group of consumers.

1. Work out where you can make the most impact

The ESG field is a wide-reaching one, with many issues to tackle. It can be difficult for organisations to know which ones, if any, to take on. Change can be well-meaning, but authenticity is key to success. Organisations can make a far greater impact in the areas and issues that are relevant to them and where they can make meaningful changes, compared to jumping on the bandwagon of trending issues day-to-day.

2. Action over intentions

The 2022 Edelman UK Trust Barometer found that trust in both media and Government is low, and that citizens are looking towards organisations to drive forward meaningful change. Focus should be centred on tangible action, with both businesses and the Government under mounting public pressure to show real progress against targets (e.g. Net Zero by 2050). Evidence and data will be in high demand – so there is a need for businesses to fully understand where and how to communicate their progress.

3. ESG should be the bread and butter of any organisation

From a business perspective, ESG action has predominantly been focused on operational changes to date. However, there is a growing call for ESG practices to 'transform corporate culture'. ESG should be embedded at the heart of organisational purpose, instead of an afterthought. This will be critical in the way organisations build relationships with stakeholders and suppliers, as well as nurturing the future employee talent pipeline. Gen Z has shown it is engaged, interested and willing to take action. This presents a real opportunity for businesses to listen and learn. Societal change comes with each new generation, and Gen Z is no different.

Our Tomorrow's World report gives the first detailed look at Gen Z's influence and perception of ESG, with recommendations from our legal experts as well as specialist ESG academic, Rosina Watson of the Cranfield School of Management, on how businesses can better engage with this dynamic audience. Launching soon, make sure you don't miss out by pre-registering to receive your copy.

Footnotes

[1] Retail investor study by FINRA Investor Education Foundation and NORC, University of Chicago, 2022