We’re seeing big shifts in the role of the corporation. The “double bottom line” (delivering financial return and social impact) is a cornerstone of direct-to-consumer disruptors. Now, even traditional category leaders are reacting to the call to look beyond shareholder value and address a broader range of constituents.
But it’s a challenge for big legacy brands to find authentic purpose when that’s simply not native to their existing business models. Committing to this transformation demands proof that there’s economic value in pursuing the double bottom line.
Is the newest generation of Americans—who are in the process of forming brand preferences and making career choices—willing to pay a price for purpose?
It matters what they think. Gen Z already accounts for 40% of all U.S. consumers. They control roughly $150 billion in purchasing power and will soon surpass millennials as the largest consumer base. They are ethnically diverse, right on the edge of minority majority. They are gender diverse, with almost double the proportion of millennials identifying as other than heterosexual. They are the first digitally-native generation, shaped by always-on technology and social media. They grew up through unprecedented social and political turbulence and are maturing into a world of ever-accelerating, disorienting change. So it’s hardly surprisingly that Gen Z is the most progressive generation ever.
In April, we surveyed a nationally representative sample of 1,002 of them. They told us there are huge societal issues that need to be addressed, and with urgency. We asked about climate change, wildlife and nature conservation, access to health care, racial equity, gender equity, wage equity, judicial equity, food scarcity, preservation of democracy, the end to gun violence and improvements to infrastructure. On average, 73% said these issues are important, and 69% said they are urgent.
They have surprising confidence in government being part of the solution. This might reflect a point in time when a president they overwhelmingly supported (70% voted for Joe Biden, closely mirroring actual election results) is surprising many with bold initiatives and action.
They have high expectations of business: Sixty-three percent said it’s important that companies become aggressive and visible in addressing the big challenges facing society today. This is why Gen Z is set to drive what we’re calling a “double top line” of purpose-driven economic value to propel the “double bottom line” of financial performance and social impact: a consumer premium (the willingness to pay more for purpose-driven brands) and an employee premium (the willingness to earn less to be part of a purpose-driven company).
Out of the respondents, 65% said they were likely to pay more for the purpose-driven brand and would pay, on average, a 48% premium. Also, 49% said they were likely to accept lower pay to work at the purpose-driven company and, on average, would be willing to earn 20% less.
Less than a quarter of our sample said they were unlikely to pay either a consumer or employee premium. Almost four in 10 said they were likely to do both. So, there is a clear connection between this generation’s progressive nature and purpose. But as is broadly true of this generation, it’s also a refreshingly nonpartisan idea: Fifty-six percent of the registered Republicans in our sample said they’d pay more for a purpose-driven brand, and 48% said they’d take lower pay for purpose.
We have no doubt that the actual value of these components varies by industry, category and brand. But for us, it is more than sufficient proof that to win Gen Z customers more easily and attract and retain the best Gen Z talent, you’d best be thinking about finding your authentic purpose and building a values-based culture.