What's Next, Now: March 2023
This month, our crystal ball predicts shifts in ESG discussions, the rise of premiumization, increasing mental health data concerns, and more.
DEVELOPING: Financial services turmoil sees some relief — As the world watched Silicon Valley Bank (SVB) fail unexpectedly and Signature Bank a few days later, panic overtook the industry. Customers rushed to make withdrawals and the contagion spread to Europe, with UBS acquiring Credit Suisse. In the days since, the stock market has been tumultuous while investors navigate the uncertainty. On Wednesday, Federal Reserve Chair Jerome Powell shared that the Fed views SVB as an outlier, the banking system is sound and resilient with strong capital and liquidity, and customers should consider their deposits safe.
Corporate sustainability efforts are facing increasing pressure — from both sides.
Consumers and media are becoming increasingly savvy, calling out brands for greenwashing as they tire of empty words when it comes to brands’ Environmental, Social, and Governance (ESG) commitments. A recent report from the Carbon Disclosure Project found that of the 4,100 companies claiming to have sustainability plans in alignment with the Paris Agreement, only 81 have created something actionable.
But a growing anti-ESG movement is also picking up traction. With a number of wins in the recent midterm elections, some Republicans are taking aim at what they’re calling woke capitalism with the goal to take down ESG investing policies and regulations. The American Legislative Exchange Council has been pushing a bill on state legislatures to combat ESG investors, and 17 states have either considered or enacted a version of it so far. This week, however, President Biden used his first veto to defend ESG investing.
With their hands tied, brands are attempting to walk a fine line by changing how they talk about ESG. For some, this means reframing the concept of sustainability around profitability. For others, it means repositioning ESG to live internally, rather than risk public statements being scrutinized. Coined green-hushing, an increasing number of organizations are keeping sustainability plans hush-hush. According to a recent survey of over 1,000 private companies, more than 70% have set carbon emissions targets — but nearly a quarter don't plan to publicize them.
Regardless of the current sentiments, brands will be required to start sharing their ESG efforts externally due to new governmental regulations in the pipeline. While most of these guidelines haven’t kicked in yet, some will as soon as 2024.
While today’s consumers are not afraid to vote with their wallets, they may become less selective with the brands they support due to the current economic climate. Some shoppers are paying less attention to labels and turning to store brands as a way to save money. A distracted audience may result in less consumer pressure, though we expect there will always be some degree of social media activism.