Half of the global workforce is now made up of millennials — the generation to which I belong.
A large majority of millennials — those born between 1981 and 2000 — are digital natives and are purpose-driven. They want to work for and be associated with businesses that incorporate environmental, social and governance (ESG) goals.
With high uncertainty due to climate change and the Covid-19 pandemic, which both have immense economic and social impacts, focusing on ESG factors is more crucial than ever.
I have often reflected upon where my desire to work on ESG matters comes from. Apart from the sense of justice I get from practising law, my perspective over time has evolved owing to my Pakistani heritage and having grown up in Norway.
These are two countries with very clear differences. Norway has seized the opportunities that natural resources such as oil and gas have provided, while it has also developed hydroelectric power and is a large exporter of seafood. It has used all these to build up a generous welfare system and establish the country’s sovereign wealth fund, now run by Nicolai Tangen. Yet, the economy’s ongoing dependence on oil makes Norway more vulnerable, as the petroleum sector is in decline.
It is a bubble that eventually will burst, but at the moment it is hard to imagine as the standard of living in the country remains high.
In contrast, Pakistan is a country with stark income inequalities, where climate change is expected to cause wide-reaching effects. But the country has the largest percentage of young people ever recorded in its history. If engaged and used properly, the youth can serve as a catalyst for the country to meet the UN’s Sustainable Development Goals (SDGs).
My generation is aware of the fact that we could be the last cohort that is able to do something about climate change.
Being on the board of the Norwegian Refugee Council (NRC) — one of the world’s leading humanitarian organisations for displaced people — gives me a deep insight into the reasons behind such displacement, which is often caused by disasters and climate change.
Seeing the various effects this can have on people naturally gives me a sense of responsibility to address these pressing challenges. You could say there is a shared sense of urgency among us millennials about the inequalities throughout the world and this drives a desire to become a responsible citizen in every manner.
This year’s Social Progress Index, a framework to measure the extent to which countries provide for the social and environmental needs of their citizens, finds the world will not achieve the SDGs until 2082.
In addition, Covid-19 is delaying progress by a further decade — which places the world 62 years behind meeting the 2030 target for achieving the SDGs, which range from gender equality to universal access to high-quality education and healthcare.
Despite all these challenges, the times we live in present an opportunity to call for more responsible leadership, to bring about systematic change and real social progress. The SDGs provide all businesses with a new lens through which they can translate the world’s needs and goals into business solutions.
Fortunately, today, the global discussion strongly asserts that a company has obligations to stakeholders who include not just shareholders but customers, employees, suppliers, and communities.
This has been driven by increased social, governmental and consumer attention on the broader impact corporations have, as well as by those institutional investors embracing the notion that a strong ESG focus can safeguard a company’s long-term success.
Yet even though there are many forces seeking to drive change, the default setting for boards and executives in many companies is to focus on the bottom line.
They face pressure to satisfy short-term expectations set on a quarterly and annual basis. Yet the mounting expectations of businesses to behave responsibly and growing questions over how value is created rely on the long-term consideration of a company’s social and environmental impact.
This tension is a real obstacle to system change and is not pushing, to a sufficient extent, the transformation needed.
But there is a ray of hope.
Millennials are stepping into positions with real decision-making power and they consider ESG performance as a mainstream factor in those business decisions.
Plus, millions of millennials are poised to receive more than $30tn of inheritable wealth by 2025, data from JPMorgan Private Bank indicates. And according to a recent Morgan Stanley survey, 90 per cent of millennial investors cite generating an ESG impact as a central goal of their portfolios.
As the next generation takes a seat at the table and nudges for change, this strengthens the likelihood of companies embedding sustainability targets into everyday practices. This will ultimately demand more active involvement in the business and lead to greater alignment between millennials’ personal and corporate values.
The writer is a lawyer and senior responsible investment analyst for Norwegian pension fund KLP
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