Generation MZ is key to ESG era

By Kim Sung-woo

Generation MZ ― a term referring to both Millennials and the Gen Z generation in Korea ― now takes up 40 percent of the entire South Korean population. Born between 1981 and 2010, the generation's impact across Korean society has been increasing. Some of them hold leadership positions in major political parties; others earned a spot in the C-suite of major corporations. The story of Gen MZ as a successful trendsetter in society is no longer foreign to Korea.

According to the Institute of Global Management, Millennials ― mainly comprising those in their 30s and representing the "M" of Gen MZ ― in their workplace tend to value being connected to their co-workers, seek meaningful experiences from their work environment and pursue active communication. They pursue flexibility in work styles but are also often loyal to their organization if they believe they have a reasonable basis to form such loyalty.

Millennials' traits are closely connected to the philosophy of ESG ― or environmental, social and governance principles. Think about Google and Amazon, where the tech giants gave into Millennials' proactive demands. In response to their voices, Google recently decided to suspend some of its artificial intelligence and cloud services tied to fossil fuels, and Amazon took steps to establish a more aggressive strategy in response to climate change.

Perhaps the most well-known example of the power of Gen MZ is Greta Thunberg's speech at the U.N. Climate Action Summit 2019. As a member of Gen Z (those in their teens or 20s), Greta sent a strong message to leaders around the world by asking, "How dare you?" to international leaders who were lukewarm in their responses to climate change.

The phenomenon of Gen MZ becoming "the next big thing" in our society ― both as powerful consumers and impactful members of the companies they work for ― poses an interesting question: Are the companies and Gen MZ on the same page when it comes to ESG values? Two surveys conducted last year present interesting observations in this regard.

One survey was on job applicants' perspectives on companies' ESG management. Another was also on ESG but this time, from the perspective of the companies that these job applicants would be joining. According to the first survey conducted by a major Korean job search platform, Job Korea, in August 2021, concerning 1,188 job seekers on their level of preference in working at a company that lives up to its ESG philosophy, 91.7 percent of the survey respondents indicated that they were sending their applications to such a company or hoping to get a job there.

As for the reason that the ESG affects their decision when it comes to choosing their workplace, 60.7 percent of the respondents picked "companies that live up to their ESG philosophy have more growth potential (than those that do not)." The second survey conducted by the Federation of Korean Industries concerning the 500 biggest companies in terms of revenue, however, painted a quite different picture.

According to the survey result announced in March 2021 on the big 500 companies' level of preparedness and awareness of ESG management, 43.2 percent of the companies ― the largest number of the responses ― picked "enhance the corporate brand image" as a reason that the companies need to adopt ESG values, followed by "directly linked to profits in and outside of the country (Korea)."

While job applicants, mostly of Gen MZ, tended to view ESG as a linkage to companies' sustainable growth, their employers viewed ESG in terms of an enhanced corporate image or from the financial performance perspective.

Neither view triumphs the other. Bridging the gap between these different perspectives is key. Companies need to understand Gen MZ's traits, which are connected to the ESG philosophy and also need to ask their own Gen MZ members whether the company has any room for improvement in terms of bringing the ESG principles into practice. Such efforts are worth making because Gen MZ ― which values connection, meaningfulness and communication as well as social values ― is the litmus of the company's success in the ESG landscape.

This issue is more than just about concerns of caring about Gen MZ at companies and raising their voices proactively and collectively, or Gen MZ consumers who will turn their back on a company's products. While Gen MZ may not be the most affluent generation of our society (yet), their attitude toward viewing ESG from a sustainability perspective draws respect. Gen MZ members are not only "digital natives" but also "ESG natives."

Son Heung-min, the first Asian to win the Premier League's Golden Boot, is one of the Gen MZ superstars. Some say his good personality, as well as his two-footed skills, earned him his success. For companies, if their brand image and financial performance are the right foot, sustainability in its the business will be the left foot. As a two-footed company with a good personality solving environmental and social issues, the company will maximize its ESG outcomes. This is precisely why companies need to understand and embrace Gen MZ's behavioral traits in the ESG era.

Kim Sung-woo is the head of Environment & Energy Research Institute at Kim & Chang.