Do social issues impact how people use their money? Survey shows ripple effect from Covid-19 and BLM
A key factor that drives the global economy and fosters its growth is consumer spending, characterized by consumer confidence, employment level and cost of living. In that sense 2020 has witnessed a completely contrasting scenario in terms of not only economical changes but also social changes. Covid-19 has resulted in the global economy plummetting to the point that many experts have likened it to the Great Depression.
The social consequences of the pandemic have been just as impactful, especially with other major stories like George Floyd and the Black Lives Matter (BLM) protests slipping into the narrative. This makes us wonder — are social issues and economic activity interconnected? Can our social stance influence our spending habits and the way we invest our money?
Personal Capital Advisors Corporation (PCAC), a registered investment adviser with the Securities and Exchange Commission (SEC) that provides advisory services, surveyed 1,000 people who donate and invest money at least three times a year. They looked at how these people decided where to put their money and examined how social justice campaigns may influence their investment and strategies. In addition, they also analyzed people's responses to companies' social stances and which generations are mostly influenced by these positions.
Are Americans spending less based on their social and political beliefs?
A large chunk of the surveyed populace responded in the affirmative. They have altered their spending habits fueled by the current climate and based on the political and social stance of a company. The PCAC's results found that At least 60 percent of people have stopped spending their money at businesses that they disagree with. Most commonly, respondents have stopped spending their money with businesses based on their approach to the Covid-19 pandemic preventive measures (57 percent), their view on face masks (57 percent) and their opinion of the BLM movement (44 percent).
The face mask mandate varies in each state, but some retailers have made it a requirement for customers to wear masks while shopping, regardless of the local regulations. A total of 29 percent of respondents revealed that they decided to break up with a retailer over their political or social stance, even going as far as to say that they would never shop in those stores again.
Supporting new business based on social and political affiliations
The current socio-political climate has caused Black-owned businesses to flourish. These businesses have historically struggled to qualify for small business loans. But the recent weeks, powered by the activism for equality and justice, have boosted their sales rapidly. For one, activists have been circulating the names of striving business owners and shops that allies of the social movements can buy from and help support Black communities.
One leader also urged Americans to spend $5M on Black-owned businesses between June and July. A total of 59 percent of the respondents in the survey started to support new businesses from March 2020. The survey also found that 64 percent of people divulged that the leading motivation to support businesses stemmed from the Covid-19 precautions.
Many Americans also gauge companies' opinions and how they act upon it, which on some occasions are completely contrasting. Population wise, Millenials (41 percent) are the most likely demographic to pay close attention to companies' stances and actions with regard to the present social scenario. A total of 52 percent of respondents, when asked about social issues and their investment portfolios said they would rather make less money by investing in companies that align with their social stance.
Socially responsible investing
The nature of spending has become less socially conscious in recent years, particularly among the younger generations because they deem it to be a less effective form of activism. The options for socially conscious spending can also be overwhelming at times, that shoppers are plagued by doubt and perplexed by who they should trust with their money.
A majority of respondents, 64 percent, said they practice socially responsible investment, of which millennials (68 percent) were the most considerate of social causes while making their decision about investments. The survey also details that the common criteria enabling socially responsible decisions included understanding what portion of profits (50 percent) of a company goes towards charity and how many minorities serve in the board of directors (45 percent).
Furthermore, in light of the current socio-political events, 26 percent of respondents revealed that they have debited money from their savings accounts towards charitable causes since March 2020. At least 31 percent of people were first time donors, a majority (69 percent) of which are expected to continue donating to those causes. Among the new donors, 75 percent contributed to causes related to Covid-19 and 49 percent gave their money to the BLM movement or other racial justice causes.