Ecological and social trends affecting business in 2018

In this final post in our four-part series, we highlight ecological and social trends affecting business in 2018 and beyond.

Social trends affecting business

Recent sexual misconduct allegations will lead to needed reforms in the workplace. In 2018, companies will take a more aggressive stance towards workplace harassment. Look for policies that include more expansive training, less consumption of alcohol at company events and new workplace practices that protect employees. (See the articles 7 Actions that Actually Help Stop Sexual Harassment and Sexual harassment accusations changing office policies.)

Misconduct claims only amplify a more transformative issue. Demographic shifts and social media are driving a culture of transparency. Companies will have to be more forthcoming with information.

Movement towards urban centers is magnifying a massive housing and job imbalance. The state of California, for example, estimates that it needs to build 180,000 homes each year to keep up with population growth, but in each of the last 10 years it has built less than 100,000 homes. Commute times in urban centers such as San Jose and San Francisco are worsening; currently, over 600,000 Californians have commute times of 90 minutes or more. Even within manufacturing, many workers cannot afford to live where they work. To address this problem, companies will continue to move towards virtual work environments and embrace collaboration tools such as Slack and Wrike.

American workers are finally seeing modest increases in wages. Strong U.S. job growth has also sparked moderate increases in pay (2.5% in November). However, the economy is currently generating more jobs than population growth. Should we experience inflation, wages will rise.

Underemployment spurs the “gig economy.” Many economists believe that the U.S. has achieved full employment, defined as the state at which people looking for a job can find one. But don’t be fooled by this term. U.S. workers are severely underemployed. The U.S participation rate for working-age men is amongst the lowest in the western world. Employers, facing severe shortages in labor, will be more willing to hire part-time help—especially as companies try to limit hours to comply with the Affordable Care Act and other mandates.

Employers are utilizing new payroll technologies. Companies such as Outback Steakhouse and Uber provide employees applications that allow for more immediate payment of wages.

Health care will radically change in the years ahead. The pending acquisition of Aetna by CVS could mark a tipping point. Kaiser, which consistently receives the highest customer satisfaction rankings, is the only behemoth vertically integrated health care company, and the CVS/Aetna deal could spark a new wave of consolidation. Such a shift will impact the entire health care economy.

Employers are becoming more proactive in managing their employees’ health and wellness. Inc. 5000 CEO Toni Jacaruso said, “We encourage everyone to do team calls while walking.” Wellness has moved well past installing gyms and yoga studios and towards conducting team activities and competitions.

Migration from Central America to the U.S. is under scrutiny. Between 2007 and 2015, the number of immigrants entering the U.S. from El Salvador, Guatemala and Honduras increased by 25% (about half illegally), while the inflow of Mexican immigrants decreased by 6%. Total U.S. immigration increased by 10% during that time. In September 2018, there will be an international conference on how to safely move and harbor immigrants around the world. The administration is expected to consider phasing out DACA in 2018.

Immersive technologies are changing the way we live. Augmented Reality (AR) and Virtual Reality (VR) are becoming omnipresent in our daily existence. Woebot, a talk therapy chatbot created by a team of Stanford psychologists and Artificial Intelligence (AI) experts, helps people manage mental health issues such as depression and teaches behavior techniques to help people develop habits such as going to the gym. Look for other new technologies that will scale mental health services. Similarly, AI-powered devices, such as Amazon’s Alexa, are now capable of predicting suicides. Technologies are shifting from assistants to companions. AI is breaking into every facet of our lives, from driving directions to loan applications.

Ecommerce is expected to grow 20% in 2018. On the heels of a record-breaking Cyber Monday, the fundamental shift in shopping behavior is staggering. Omnichannel retailers are creating destinations that merge the in-store and online experience into one. Today, shoppers are caring less about material possessions and gravitating more toward “places to be.” For example, Restoration Hardware has created an “Everything Under One Roof” store in West Palm Beach where shoppers can drink coffee while sitting in the furniture they would buy. Retail centers are being completely transformed into experience centers. Shopping centers will also feature more experiential gyms, as malls covet more foot traffic and higher-educated consumers.

Given the stress of everyday life, consumers are gravitating toward new kinds of messaging. In the midst of political turmoil, shootings, natural disasters, fake news, rising anxiety and drug use, companies are finding new ways to communicate with customers. In a world with too much information (TMI), too much choice (TMC) and too much technology (TMT), there is a movement to simplify life and to provide products that are authentic to the core. Companies are finding ways to create purpose-driven brands that tell a story. Also, products and experiences have become highly personalized.

Speed and accessibility drive social media. Trends such as live streaming, Instagram Stories and mobile messaging illustrate the need for speed and migration to mobile. Given privacy concerns and the viral nature of such experiences, social media platforms are under pressure to moderate content more diligently.

Throwaway fashion continues to be the rage. Amazon Prime and various services that allow free returns only magnifies the “post-purchase forgiveness” trend. Younger shoppers are migrating away from possessions and towards products that allow them to express themselves. Categories such as athleisure are growing. The functionality of clothing is being redefined with features such as embedded gadgets and materials that interact with your mobile device.

Personalized food is trending. At Austin-based Vox Table, diners’ tastebuds are tested upon arrival so that their food can be modified to suit their tastes. In the future, restaurant menus will be constructed based on the genetic makeup of diners. In 2018, look for the expansion of formats that include less labor, “gut-friendly” menus with probiotic, prebiotic and anti-inflammatory ingredients.

There is a significant shift underway in consumer tastes around alcohol beverages. Sour beers, rosé and bourbon are in. Irish whiskey is also moving up in prominence, as evidenced by the fanfare surrounding a €11 million renovation of Jameson Distillery Bow St. in Dublin.

Marijuana is legal in 29 states, and seven others allow for recreational use. However, marijuana is still illegal at the federal level. Among the barriers to the industry are tax laws that preclude certain income tax deductions for expenses related to distribution.

Environmental trends affecting business

Following a year in which the United States was battered by major hurricanes and California was savaged by fire, a number of ecological trends in business emerged:

The recent summit in Bonn was meant to bolster commitments made at the Paris accord to keep global warming well below 2 degrees centigrade hotter than pre-industrial times. Environmental groups worry that Trump’s withdrawal from the accord will give safe haven to other nations that are not instituting controls for carbon emissions. Sweden is setting the bar, including new legislation that requires “no net emissions” by 2045. In order to accomplish such an ambitious agenda, scientists are looking for ways to extract carbon emission from the air.

Environmentalists scorn the confirmation of Scott Pruitt as the head of the Environmental Protection Agency (EPA). Viewed as a climate change skeptic, Pruitt is rolling back the Clean Power Plan, an Obama-era mandate, referring to it as a replace and not repeal initiative. Trump has called for more investment in oil and gas and to “revitalize” the U.S. coal industry. A recent New York Magazine article went viral when it illustrated worst-case scenarios for climate change.

More than 300 global companies have committed to reducing emissions. Oil companies, for example, are migrating to more natural gas that is often found side-by-side in oil exploration. (See the corporate global Taking Action campaign.)

2018 energy prices predicted by Kiplinger’s include:

• Crude Oil $50-$55
• Natural Gas (BTUs) $3.00-$3.20
• Diesel Fuel $2.60-$2.85 per gallon
• Electricity $10.3-$10.5 cents per KHW
• Propane $2.40-$2.60 per gallon

Water conservation has become a priority for many companies. Levi’s has developed the WaterLess Jeans, which are produced using 96% less water than previously. Ford reduced its water consumption by 61% over a 15-year span, and builders and landscapers throughout the Southwestern U.S. are building more drought-tolerant landscapes.

Tesla will cross a milestone in 2018 when it sells 500,000 vehicles. While Tesla made a bang with its electric-powered commercial truck, its price tag will be too hard for most to stomach, even with zero emissions.

Autonomous vehicles — many of which are likely to be electric and will reduce traffic — are literally right around the corner. By 2020, self-driving cars will be put into service. BMW, Ford and GM are in a race to be first to the party. Expect the first of such vehicles o be in the form of ride-sharing programs through Uber or Lyft. In another seven to eight years, expect autonomous commercial vehicles to be in service.

Scientists are using technology in sustainability efforts. For example, robots are being used to intervene in managing marine species. Electronic noses (sensors) are being used to detect wildlife trading.

The U.S. solar industry is under some stress as a result of cheap Chinese imports. The United States is positioning for a tariff that could dramatically impact solar prices.

Some countries around the world are struggling to convert to renewable energy. Last summer, following the closure of 10 coal plants, Australia experienced numerous blackouts because it hadn’t developed enough new energy sources to provide a steady stream of electricity. This political quagmire highlights the unpredictability of the energy sector. This is certainly true in the United States as well.

Hurricane Maria left Puerto Rico and its energy grid in shambles. Governor Ricardo Rossello is resolute to use solar and wind energy and to install modular nuclear reactors. Puerto Rico could be the flashpoint for new investment in renewable energy in impoverished communities.

Related reading

Part 1: Political trends affecting your business in 2018 and beyond

Part 2: Economic trends affecting your business in 2018 and beyond

Part 3: Technology trends affecting your business in 2018 and beyond

Sources

• California’s Climate Ambitions Get Stuck on the Freeway, Bloomberg Businessweek (November 20, 2017)
• Apps Give Workers Early Access to Pay, The Wall Street Journal
• How Do You Build Morale and Team Spirit in a Remote Workforce? Inc. Magazine (October 2017)
• Rise in U.S. Immigrants from El Salvador, Guatemala and Honduras Outpaces Growth from Elsewhere, Pew Research
• Innovation, Bloomberg Businessweek (November 20, 2017)
• What to Do with Dead Malls—The Future of Everything, The Wall Street Journal
• Let Your Genes Do the Ordering, The Wall Street Journal
• 7 Trends That Will Shape Restaurants in 2018, Restaurant Business
• Disjointed, The Economist (November 18, 2017)
• What they don’t tell you, The Economist (November 18, 2017)
• Sucking up carbon, The Economist (November 18, 2017)
• Calculating, The Economist (November 18, 2017)
• The Kiplinger Letter, October 27, 2017
• The Kiplinger Letter, November 22, 2017
• Trends in Ecology and Evolution
• Commercial Enterprises Will Be Impacted by Proposed Tariffs on Solar Equipment, Environmental Leader
• Dark Days of Summer, Robert Milliken
• The World in 2018, The Economist
• The 2018 Fortune Crystal Ball: 59 Predictions for the Year Ahead, Fortune (November 20, 2017)

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