Ecological and social trends affecting business in 2019
Editor’s Note: In Part 1 of our series on external trends impacting small and mid-sized companies in 2019, we study ecological and social trends affecting business.
Social trends affecting business
A study published in the Harvard Business Review revealed that 80 percent of employees desire more flexibility at work when it comes to location and schedule, but less than 25 percent are satisfied with the flexibility offered by their employers. [i]
The controversy surrounding the Kavanaugh hearings was a source of deep political strife and workplace conflicts. Google CEO Sundar Pichai released a memorandum warning employees not to let their “personal politics affect their work”. [ii]
Political strife and technology have combined to create a boon in “hashtag activism.” On the heels of the midterm election, consumers and employees will be more active as new causes proliferate.
Federal privacy laws
California enacted sweeping privacy legislation in June, impacting businesses with more than $25 million in revenue or those who collect and disseminate information to more than 50,000 people. Residents have the right to see who has collected their information and with whom they have shared it. [iii] Lawmakers are considering similar legislation in 2019, after Apple CEO Tim Cook called on the U.S. to pass a comprehensive federal privacy law in the mold of the EU’s General Data Protection Regulation. [iv]
Cook said our data had become “weaponized with military efficiency.” Tech giants must comply with EU fines as steep as 4 percent of revenue. All companies will be well advised to assess privacy and data policies.
Equality in the workplace
In the aftermath of the launch of the #MeToo Movement, more than 100 women were elected to Congress. California passed Senate Bill 826, the nation’s first move to require female representation on boards of directors in publicly-held companies. There is no standard for private companies as of now.
In 2019, more companies will be focused on their gender equality policies and seeking out more independent female directors.
Social media trends
For the first time since the advent of social media, its usage is down overall (about 4 percent from prior year). Leading social networks like Facebook, Twitter, LinkedIn and Instagram seem to have peaked. Younger Americans are embracing messaging platforms like WhatsApp, Facebook Messenger and Snapchat. [v]
Video is expected to account for a whopping 85 percent of total internet traffic by 2019. Further, 54 percent of internet users already watch videos on a social media platform monthly, and that number will only grow over the coming years.
Artificial intelligence in customer service
By 2019 chatbots will be the norm for things like ordering pizza, choosing a mobile plan or booking a hotel room.
In a recent Conversocial report, 26 percent of executives said their businesses aren’t prepared for the increased volume expected as a result of mobile and internet technologies. Those who are proactive are focusing on innovating through channel adoption and platform partnerships.
Bots/AI are predicted to be the technological advancement likely to have the most impact on customer experience strategy (31 percent), closely followed by contextual commerce and UX design (24 percent) as well as cashless technology (18 percent). [vi]
Among all of the noise, people are “seeking normalcy” in a quest to return to established knowledge. In a period of disenchantment, many people are reverting back to what they know, and familiar brands that provide comfort are resonating. Among Amazon’s hottest categories are board games.
While the consumption of cannabis-related products is on the rise, smoking a joint isn’t what it used to be. The industry is focused on providing alternatives, such as edibles, that are more socially acceptable. In Canada, where pot was just legalized in October, edibles are expected to outsell pot by two to three times. [vii] The industry is bracing for the federal legalization of cannabis as more states follow suit. Recently ousted Attorney General Jeff Sessions was a staunch opponent to legalization. It is likely to be a divisive campaign issue in 2020.
The “budding” cannabis trade had even offered up a new form of tourism. People are “canna-touring” states such as California, Nevada and Colorado. [viii]
Millennials and Gen Zs are traveling much more than generations before them. They are saving money day to day so they can splurge on exotic destinations. Their top picks in 2018 were France, Australia and Italy. Online travel agencies that focus on experience are observing a resurgence. [ix]
Food and nutrition
The spread of mobile application and internet technologies is boosting the popularity of celebrity chefs, and dietitians touting new food genres that speak to the rise of food allergies and sensitivities.
With its abundant medicinal properties, tea is the new coffee and giving rise to tea bars in upscale urban malls. Tea’s cousin, kombucha, is the foundation for a new craze of fermented foods. Heme (from the Greek word for blood) is considered a sustainable protein alternative and is being used by tech-food companies to create vegetarian alternatives such as potato proteins, with a mouthfeel and flavor similar to meat. Vegetarianism is also on the rise, as well as macro diets that feature or remove various ingredients that are the source of disease.
Environmental factors affecting business
While U.S. population growth is slowing, the world population is about 8 billion, and growing more than 1 percent per year. [x]
Business and the environment
China now has the distinction of being home to 10 of the 20 most polluted cities in the world as measured in PM2.5 (particulate matter smaller than 2.5 microns) as its coal-burning power plants continue to generate particles at an alarming rate. [xi] In 2015, 70 percent of the country’s electricity was generated from coal. In 2016, President Xi Jinping announced sweeping policy changes on the heels of “red alerts” closing schools and factories. China is embarking on a wave of clean energy initiatives.
Natural gas is growing faster than other sources of power generation. Many Trump reforms aimed at moving the country back to coal are held up in the courts. 10 percent of coal plants are expected to close by 2020. [xii]
By 2020, the U.S. Energy Information Administration projects the following proportions of energy consumption [xiii] :
- Petroleum and Other Liquids 38%
- Natural Gas 30%
- Coal 14%
- Renewables 9%
- Nuclear 8%
While wind, solar and other renewable sources represent alternatives to traditional energy, they still relatively expensive, and are expected to represent less than 15 percent of all energy consumed by 2030. The good news is that GNP is expected to grow about 3-4x energy consumption.
In 2019 cruise ship operators (who are big polluters) will switch to diesel to comply with global emission standards that go into effect in 2020. The increased demand is putting pressure on major airlines whose fuel costs are going up.
Companies will be under more pressure to comply with environmental laws and standards. Environmental protections have come a hotbed issue for boards and investors.
Recently, U.N. Secretary-General António Guterres positioned climate change as an issue that poses an existential threat to humankind. He reiterated that “it is time to get off the path of suicidal emissions.” His new Climate Summit in 2019 is a rally cry for the international community, including sustainable energy production, economic growth, green investment and better stewardship of natural resources. [xiv]
An immediate threat is a 2019 El Niño. NOAA and Columbia University believe there is a greater than 50 percent chance of El Niño conditions this year.
Oil prices are normalizing heading into 2019, after a reaction to Iran sanctions drove prices up to $76 per barrel. The production of U.S. crude (over 11 million barrels per day) is now the highest in the world. Kiplingers projects oil prices between $65 and $70 per barrel by early next spring. [xv]
Hydro & wind power
Wind power will surpass hydropower and will be the source of 7 percent of U.S. electricity in 2019. The U.S. has steadily been adding wind power capacity, which will reach 104 gigawatts this year. [xvi]
The recent California wildfires were a reminder of the power of nature’s fury. The National Science Foundation, Department of Energy and U.S. Environmental Protection Agency are collaborating with U.S. universities on FireX, and initiatives are studying how to control wildfires. The alliance’s 2019 field study will focus on how emissions travel and their effect on air quality and climate. [xvii]
The throwaway fashion trend made popular by retailers like H&M and Forever 21 has been a source of frustration for environmental advocates. Producers are increasingly understanding their social impacts and are adopting a more eco-friendly stance by using recycled materials and reducing use of chemicals in their production processes. [xviii]
The new BREEAM (Building Research Establishment Environmental Assessment Method) standard goes into effect in 2019. [xix] BREEAM assess the sustainability of buildings and will extend beyond LEED certifications.
Sustainable sources of water and food safety continue to be two of the biggest challenges facing growers and the food supply chain. The recent romaine scare sent shivers through the supply chain.
As much as 70 percent of the world’s water is consumed by the agriculture business, a number that is expected to swell to 90 percent. Many growers and corporate farms are acutely aware of their responsibility to be stewards of their land and the animals they care for. Animal welfare has become top of mind for producers, in part because of the popularity of social media. Speaking of young people, agriculture is a hot major as ag and biotech companies compete for talent.
[i] The Future is Flexible, Harvard Business Review, September 2018
[ii] Google CEO Warns Staff: Stay Nonpartisan by Douglas MacMillan, The Wall Street Journal
[iii] The Kiplinger Letter, September 7
[iv] Apple CEO Condemns Data Industrial Complex by Schechner and Peker, The Wall Street Journal
[v] 6 Unexpected Trends in 2018 Social Media Research by Jay Baer, Convince & Convert
[vi] Customer Experience Trends for 2019: Building the Organization of the Future by Harry Rollason, The Conversation
[vii] A Society in Transition, an Industry Ready to Bloom: 2018 Cannabis Report
[viii] The Kiplinger Letter November 8
[ix] Top 6 Millennial, Gen Z Travel Trends to Watch, Travel Agent Central
[x] Next Big Future
[xi] China and India vs. Smog by Roston and Tartar, Bloomberg BusinessWeek
[xii] The Kiplinger Letter, September 7
[xiv] Secretary-General outlines vision for 2019 Climate Change Summit, Permanent Missions
[xv] Oil Market to Remain Jumpy by Jim Patterson, Kiplinger
[xvi] This Will Be America’s Top Renewable Energy Source by 2019 by Maxx Chatsko, The Motley Fool
Category: Economic / Future Trends