Sustaining Future Workers and Consumers Moves Up in ESG Efforts

Rampant automation and the recent fevered AI adoption rates coupled with widespread layoff trends are spiking concerns over the sustainability of future workforce and consumer bases. In response, stakeholders and investors are steadily increasing their demands for more social substance and sustainability as part of corporate environmental, social, and governance (ESG) programs.   

“Business longevity is predicated on being able to sustain a healthy customer base while being driven by a healthy internal business engine. Their strategies need to support that,” says Simon Ninan, SVP and global head of business strategy with Hitachi Vantara. 

The heat is on for companies to adopt a more aggressive approach to this “double bottom line,” which is defined as a business strategy and management philosophy that focuses on achieving both financial profitability and positive social/environmental impact. Companies that explicitly manage to a double bottom line are going beyond base (ESG) considerations and corporate social responsibility (CSR) obligations.  

“Rather, these become part of the mission of the company. When you add this dimension of value, companies are actually able to strengthen their core in a way that makes them stickier and more resilient with customers and the market, as Hitachi can attest to. The reputation and the legacy of businesses will see long-term benefit,” Ninan says. 

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Who’s Protecting Jobs and Future Customers? 

One could argue that sustaining future workforce and consumer bases are two sides of the same coin considering most consumers must be gainfully employed to consume goods and services. In any case, the heat is on for companies to explain how they plan to ensure people can work, eat, and thrive in the future.  

However, there are still companies and countries that leave society on its own in adapting to change -- even highly disruptive change -- as humans have in years past. There are still others who argue that technologies like automation and AI help rather than hurt gainful employment rates. Such arguments often point to studies for support such as the recent report by Stonebranch, which found that workload automation (WLA) and business process automation (BPA) saw double-digit growth in the past year, by 11% and 14%, respectively. 

“The rise of these two categories shows companies automating processes that will better the working conditions and workload for employees. This contrasts with a common myth that automation shrinks departments and leads to staff reductions,” says Peter Baljet, CTO of Stonebranch, a provider of service orchestration and automation products. 

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However, there are likely limits to how far automation efforts go in terms of protecting or augmenting jobs versus cutting jobs, the historically preferred business tactic in reducing overhead. Indeed, automation and AI products are often touted for their cost-reduction benefits and rarely solely in terms of adding to worker efficiencies. When coupled with a troubling trend in widespread layoffs in tech and elsewhere, despite a booming economy, it’s tough to swallow the “automation and AI are the worker’s friends” claim. 

“There’s some merit to these arguments, of course. But, on the other hand, the issues we are dealing with, such as large-scale automation, are likely to be more dramatic and disruptive than we have ever seen in society. It’s a good thing that such conversations are being had, because this is what will help us identify what we need to do to adapt as society to the inevitable,” Ninan says. 

Measuring the Value in Investing in Future Consumers 

Expect pressures to rise to adopt more social protections for jobs to ensure the sustainability of the employee and consumer bases.  

There’s plenty of hard data to make the most competent and accomplished employee sweat about their employment future. According to a report by Challenger, Gray & Christmas, an outplacement firm, companies planned 721,677 job cuts in 2023, a 98% increase from the 363,824 cuts announced in 2022. Further, the firm said that technology led all industries in job cut announcements last year with 168,032, up 73% from the 97,171 cuts announced in 2022. 

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But pressures for more social protection are not rising just from the desperate and worried people who find themselves still hunting employment months or even years after a layoff. Investors, governments, and business groups are worried about a potential tipping point in the near- or mid- future too. 

“The term customer lifetime value (CLV) has been around for the last couple of decades, as a metric that indicates how much total value a business can expect from a given customer throughout the lifetime of their relationship with the business. CLV calculations are going to need to adapt to all the ongoing and future changes in products, services and customer needs that we are seeing play out,” Ninan says. 

“In a similar vein, businesses need to start thinking about a conceptual employee lifetime value, for how they can maximize the value associated with each employee relationship over their lifetime with the company. That kind of calculation favors retention and upskilling of talent,” Ninan adds. 

Fading Boundaries Between ESG and CSR 

A truly successful ESG program isn’t merely adopted by an organization. It’s an integral part of a company’s DNA. But there’s movement across the board to evaluate an organization’s total impact rather than awarding credits among a company’s various efforts. 

“In the lead-up to 2030 net-zero targets, we’ve also seen the distinction between the 'E' (Environmental) and the 'S' (Social) of ESG fade as companies are increasing environmental investments through their CSR programs,” says Sona Khosla, chief impact officer at Benevity. 

In any case, continued layoffs and slow hiring trends are ratcheting up concerns over the future of work in a bad way -- a diminishing pool of future workers and a corresponding smaller pool of consumers. Expect social responsibilities to pop to the top of the list of corporate performance pressures. 

“All indications point to growing regulatory, shareholder, and stakeholder pressures that will have companies measuring, managing and reporting on the totality of their environmental and social initiatives,” Khosla adds.