Trends show Gen Z Pushes for 'Conscious Capitalism'

A study conducted by Harvard Business Review found that young consumers prefer to shop from brands and companies that are socially conscious. Dubbed “conscious capitalism,” this shift in consumerism is being tipped by Gen Z, who are aging to be the largest group of consumers in the U.S. Their passion for activism and social justice issues has led to companies like Netflix to publicly shift their funds to meet those needs. 

HBR based their study upon what they call “The Netflix Model.” Back in June, the streaming giant announced they would be moving 2 percent of its cash – around $100 million – into Black-owned or Black-run banks which would, in turn, allow those banks to lend more. It’s no secret that there’s a racial disparity when it comes to banking. Netflix moving their assets was a way for them to level out this inequity. 

Other organizations and businesses began to follow suit in order to win over Gen Z and Millennial consumers in what HBR calls “justice deposits.” Twitter announced a plan to move 1 percent of their cash, estimated at $100 million, to Community Development Financial Institutions (CDFI). CDFIs are banks where 60 percent of total lending and services are targeted toward low-income people. Costco, Biogen, and Paypal all announced they would also move $25 million, $10 million, and $500 million, respectively, into CDFIs. 

Justice deposits help remedy the huge inequities that occur in the mainstream banking and lending system. According to HBR, “Home equity is 35 percent of the average household’s net worth, yet African Americans face mortgage denial rates that are twice as high and pay more for their mortgages than white Americans.” Black-owned banks are a viable solution to this. 67 percent of their loans go to Black households, compared to the average 1 percent of loans from mainstream banks. “This lack of access to capital has massive ripple effects through the entire community,” HBR adds. 

Margaret Anadu, the head of Urban Investment at Goldman Sachs, told HBR, “To close the racial wealth gap, private capital has to be part of the solution because it sits at the center of wealth creation in our country.” 

Justice deposits are also a great, low-risk way for companies to put their money where their mouth is. The study reported that 60 percent of Americans said that brands’ and corporations’ response to racial protests would sway their decision to boycott or purchase from that brand. These trends were mainly swayed by younger Americans who are three to four times more likely to be motivated by conscious capitalism and fair business practices.

Companies that don’t follow the lead when it comes to social responsibility will miss out on an entire generation of powerful consumers. Netflix likely led the way in justice deposits to remain relevant to Gen Z consumers, who will have to come off their parents’ Netflix accounts soon. HBR adds, “In order to grow, every organization must have a strategy to win the next generations of consumers.”