One of the latest topics around board governance is oversight of ESG, which stands for Environment, Social, and Governance. Strategies that create financial value and are socially and environmentally responsible, are now being seriously driven by both Millennials and Gen Z consumers who are impacting the boardroom.
Millennials and Gen Z, those born after 1990, are now at more than 2 billion people who have significant influencing roles and buying power. Gen Z, who know nothing except the digital age, want engagement in the products they buy and authenticity. Values are important to them, and their loyalty stays only when they feel engaged and can trust the brand.
This is a huge opportunity for credit unions who have built their reputations on member focus and truly serving the underserved. Credit unions should take advantage of this history and relationships with their members to engage these new groups at the deepest levels. Technology is a must to reach them, so strategically focusing on their needs and wants from an online and digital perspective is key. Authenticity, brands that can be trusted, and speed should be the focus. Gen Z is not strongly swayed by marketing campaigns and they can navigate between real and fake claims. They are inherently skeptical and seek transparency.
How well do you know these potential new members? Is your brand perceived by them vs. the banks? What are your strategies to capture both the Millennials and Gen Z? What capabilities do you have in place to meet their high expectations? These are questions raised by IBM Institute for Business Value in their Executive Report, “Gen Z brand relationships.”
Leaders need to begin to think strategically about the issues of Environment, Social, and Governance (ESG). They need to communicate these issues clearly, as well as possess knowledge and judgment around these areas. Issues such as climate change and social inequality are now coming front and center for the private sector. In September 2015, Sustainable Development Goals were adopted by world leaders recognizing that without the private sector, significant progress will not be made towards sustainable economic development.
Millennials not only are drawn toward purchasing products from socially conscious and purpose-driven companies, but they want to work for them as well. Doing good and creating value has always been the focus of the credit union industry. Let’s capitalize on this foundation now, and earn the trust of these new demographics, who are people and markets waiting to be cultivated. Take a look at who your directors are. Do you have a knowledge and understanding of these new groups and trends. Are you studying these emerging issues and collaborating to address them? Turning ESG into a competitive advantage should be on the agendas for all credit union boards.