New generation, new competitive norms
Patricia Dwyer, founder of Hong Kong-based sustainable business consultancy The Purpose Business, on how eco-conscious Generation-Z attitudes will help keep China competitive.
Chinese businesses know all about competitive advantage. The nation’s rise to become the second largest and fastest growing global economy has been predicated on it: the world’s top brands have beaten a path to the doors of low-cost, high-quality Chinese suppliers. Meanwhile domestic firms are increasingly proving that they can out-compete all newcomers in the international marketplace.
But harnessing the next phase of growth will depend on wielding a new competitive weapon. “‘Where do you want to be in 10 or 15 years’ time?’ is a decision every business has to make,” says Patricia Dwyer, founder and director of Hong-Kong based sustainable business consultancy The Purpose Business. “If you want to grow your business, you want to scale, price will continue to be a factor but the importance of sustainability will only grow over time.”
It’s part of a global generational shift towards conscious consumption that is uniting young people in China with their peers across the world. The attitudes of Millennials (born between the early ’80s and mid ’90s) and Generation Z (mid ’90s to 2010s) have been shaped by the climate crisis and they represent a growing desire for brands and employers that not only do well but also do good.
Dwyer – who is also a World Economic Forum Young Global Leader and a fellow of the Asia Society – counsels business leaders and investors that they ignore the impact of this generational changing of the guard at their peril. “They are more vocal and more curious, and like any younger generation they demand more – just like we did at their age,” she says.
Thanks to the internet they are better connected and better informed on environmental and social issues, she adds, and they are not afraid to question their ‘elders and betters’ when the occasion demands it.
A survey across nine countries by international strategy consultants OC&C in 2019 found that Gen-Z consumers in China are among the most eco-conscious in the world. One in four are ‘concerned by environmentally friendly consumption’ compared to an average of 13% for Gen Z worldwide. These concerns are likely to feed into their buying decisions as they become more economically active over the next decade or so. Chinese people of all ages are also more aware of the UN’s 17 Sustainable Development Goals (SDGs) than those in most Western countries. A report from Ipsos Mori found that 90% of Chinese adults have heard of the SDGs compared to a global average of 74%, and only 50% in the US.
Against this demographic background, it’s time for ESG to move up the corporate agenda. Companies that merely bolt it on as a ‘nice to have’ will not have access to the business opportunities presented by the wave of green investment that is spreading across China. “You need to have a sustainability roadmap and it needs to sit right within the business strategy, if it doesn’t already,” says Dwyer.
That’s because sustainability has to be transparent and it has to be consistent if it is going to stand up to the scrutiny not only of savvy younger consumers and investors, but also employees. “About half my team is under 35 and they always ask: why? Why are we doing what we do – reporting, training, strategy – and why are things the way they are? These are questions that younger talent increasingly demand to know the answers to,” says Dwyer. Firms who can’t supply those answers risk losing out in the talent war to rivals who can.
A lot has changed since Dwyer quit her successful corporate career in 2015 to set up The Purpose Business in Hong Kong. As a pioneer of sustainability, Dwyer and her start-up team of six first had to educate the market on the benefits of a purpose-based approach to sustainability before they could start selling to it. “When we started, purpose was a very premature principle. It was the hardest business to be in, because there was no way you could tell anyone in Hong Kong that profit was not their purpose.”
But attitudes have shifted since those early days and now both institutional and private investors factor ESG into their decision making. “Funds increasingly have an ESG strategy requirement and that is just getting more mainstream,” says Dwyer. “Purpose is now part of the language that Asian companies are using.”
The rise of that connected and outspoken younger generation will usher in the next phase, where sustainability becomes a key driver of growth. A new cohort of smart, internationally minded business leaders is already emerging, ready to grasp the competitive advantage that sustainability increasingly presents. Dwyer calls them the ‘global shapers’ – young, ambitious and at the forefront of ESG-inspired progress. “They are at the cutting edge of new products and innovation,” she says. “I think they are really going to change the landscape. The level of enlightenment and knowledge is there – I am optimistic that they will see it through.”
Patricia Dwyer also has an MA in Globalisation and Governance from the University of Birmingham.
2008: Joined Shangri-La Group as its first head of CSR and sustainability
2012: Issued the Group’s first sustainability report, paving the way for Shangri-La to join the UN Global Compact and be recognised by the Dow Jones Sustainability Index
2015: Founded The Purpose Business; named a Young Global Leader by the World Economic Forum; completed the Transformational Leadership certificate at the University of Oxford
2016: Joined the World Economic Forum’s Global Agenda Council on Oceans
2018: Completed the Global Leadership & Public Policy for the 21st Century programme at Harvard University
2019: Joined the board of Hong Kong-based charity Enrich
2021: The Purpose Business expands to have advisors based in the UK and USA