Reconomy, a leading supplier of sustainable waste management solutions, explores how the younger generations are influencing businesses to be more environmentally conscious and how businesses can lead the way for a brighter tomorrow.
What does Gen Z think?
The increasing interest in sustainability has created a space for young people to campaign for continued action against climate change. And thanks to the powerhouse voices of Greta Thunberg, Vanessa Nakate, and Mya-Rose Craig, Gen Z has become the generation of sustainable activists.
According to a survey by Bupa, 63% of Gen Z and millennial respondents reported feeling the burden of climate change, compared to only 37% of Gen X and 28% of baby boomers. This could be a result of powerful media coverage that has raised awareness of the damage being caused by our behaviour. Firstly, Blue Planet in 2017, then the WWF advert ‘Fight for Your World’, which resonated deeply with many, stating that this is the first generation to know that we are destroying the world and the last to do anything about it.
These values have gone on to influence the individual behaviours of older generations. And, according to a survey conducted by Deloitte, 39% of adults reduced the number of new goods they bought between 2020-2021 as a result of the values of Gen Z and millennials.
How has this affected businesses?
Individual behaviours cannot be solely responsible for reversing the negative effects of global warming. As a result, people are looking beyond individual factors by holding businesses and governments responsible for national and global carbon footprints.
34% actively chose to buy from sustainable brands between 2020-2021. But how do consumers know which brands are sustainable?
Marketing campaigns can be utilised to showcase sustainable products or services. This presents brands as desirable to Gen Z and millennials. However, actions speak louder than words, and delivering results is proving to be just as important as marketing. Sustainability within businesses is itself changing. The commercial landscape for companies is evolving and moving away from a consumptive capitalism approach towards a more regenerative form. Businesses that fail to adapt are likely to face extinction.
The shift in consumer behaviours has also encouraged the growth of the green economy, which was reportedly worth £205.76 billion in 2021. This includes over 75,000 low-carbon businesses, such as recycling plants and wind turbine manufacturers, that prioritise the environment and employ over 1.2 million people across the nation.
How can businesses tackle climate change?
More often than not, businesses are taking steps to become more sustainable. On the other hand, sometimes companies are stuck on a transitional path, stalled by individual cost centres that are preventing holistic decision-making.
This can often lead to departments making polarising decisions based on the way that their business runs. In these circumstances, companies fail to recognise the full scope of their resource cycle and all of the benefits that come with having a varied approach.
To achieve meaningful progress, businesses should successfully implement sustainable waste management solutions into their culture, structure, and strategy. This might not be implemented straight away for some, although from a procurement perspective, they should be able to make decisions that have a lasting impact on the entire organisation.
This has been a challenge for some businesses until recently, as each unit would procure for their own requirement, and there were not as many comprehensive solutions that could consider the whole resource cycle.
Overall, there’s no doubt that sustainability is taking centre stage. Baby boomers and millennials have paved the way for Gen Z to campaign for current concerns surrounding the speed of climate change. In turn, businesses are being held accountable for their actions, fuelling hope for a future free from the negative effects of global warming.
Sources
https://internetretailing.net/sustainability/sustainability/a-third-of-uk-shoppers-demand-greener-products--and-will-pay-more-for-them-22190
https://www.glamourmagazine.co.uk/gallery/gen-z-climate-activists
https://www.bupa.com/news/press-releases/2022/gen-z-seek-ethical-workplaces-as-environ-mental-health-burden-bites
https://www2.deloitte.com/uk/en/pages/press-releases/articles/four-out-of-five-uk-consumers-adopt-more-sustainable-lifestyle-choices-during-covid-19-pandemic.html
https://www.prca.org.uk/Reaching-Millennials-and-Generation-Z-with-Purpose
https://www.bbc.com/future/article/20211105-how-carbon-might-go-out-of-fashion
https://www.theguardian.com/business/2022/jan/14/dirty-greenwashing-watchdog-targets-fashion-brands-over-misleading-claims
https://www.theguardian.com/environment/2021/aug/10/uks-green-economy-four-times-larger-than-manufacturing-sector-says-report
https://www.countryandtownhouse.com/travel/does-carbon-offsetting-actually-work/
It is almost inconceivable for a business operating in today's non-cash society not to offer its customers the opportunity to pay with a credit card. Every company needs an electronic payment solution, which means that every company must enter into some arrangement with one or more credit card processors to effect credit card sales. Typically, under these arrangements, a merchant will agree to accept credit from its customers (cardholders) who properly present a credit card at the point of sale, subject to certain conditions, with payment to the merchant to be made by the credit card processor after the credit card processor's receipt of payment from the cardholder. Generally, all the payments by the credit card processor are indeed conditional and subject to chargebacks, fees and fines. In some instances, the credit card processor may, in its own discretion, suspend payment of any funds if an event of default has occurred (under either the processor's agreement with the merchant or the cardholder), or if the credit card processor has reason to believe that there may be fraudulent activity relating to transactions submitted to it by the merchant. Chargebacks to the merchant can result from, among other things: (a) a cardholder disputing the validity of a transaction; (b) a cardholder disputing the quality or receipt of goods or services; and (c) a copy of the sales draft was not provided upon request. It is important to recognise that these chargebacks can occur under the processing agreement even if there may be no or little evidence to support a dispute, the result of which is that the merchant's receipt of payment for credit card sales may be further delayed pending resolution of any dispute. Making matters worse, in some instances, the merchant now is left with no alternative but to expend the time and resources necessary to recover on these chargeback transactions, which in essence represent accounts not purchased by the credit card processor.
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Further complicating matters, credit card processing agreements typically authorise the processor to establish a Reserve Account “in an amount to be set up” by the credit card processor in its sole discretion, based upon, among other things, processing history and the potential risk of loss that the processor may determine from time to time. If the amount in the Merchant Account is less than the required reserves in the Reserve Account, the merchant will be obligated to pay the shortfall. The Reserve Account may also be funded from funds otherwise going to the Merchant Account without notice. In some instances, this Reserve Account can be held for the greater of 270 days after termination of the credit card processing agreement or for such longer period of time as may be consistent with the processor’s liability for credit card transactions. The processor can also unilaterally require an inspection of a merchant’s business at the merchant’s cost and expense.
Credit card sales do not always result in actual cash revenues to a merchant, and even when the merchant is paid, payment may occur significantly later than the actual underlying sale.
In short, credit card sales do not always result in actual cash revenues to a merchant, and even when the merchant is paid, payment may occur significantly later than the actual underlying sale. Here are five recommendations that a merchant should consider when trying to effectively manage credit card transactions for its business, given the necessity of credit card sales and the complexity involved:
- Read and Understand the Processing Agreement.
This may seem obvious, but the importance of a merchant really knowing the terms of its credit card processing agreement is crucial. For example, most credit card processing agreements provide for a maximum "Combined Estimated Monthly Volume" and "Estimated Highest Ticket/Sales Amounts" associated with every credit card facility—if the merchant exceeds these amounts, the credit card processor may hold the merchant funds pending further activity. As a result, a merchant should ensure that these terms are consistent with its projected sales; if a merchant senses that its projected credit card sales for a given month are over $100,000, for example, it should not agree to a Combined Estimated Monthly Volume of $70,000. So too, a merchant with large ticket items should ensure that the Estimated Highest Ticket/Sales Amounts work for its business sales. In addition, credit card processors impose a lien on credit card accounts; a merchant needs to make sure that the imposition of this lien does not conflict with other loan documents and lending arrangements.
- Establish Internal Coordination.
Successful merchants do everything that they can to stay within the "four corners" of their processing agreements to maximise the opportunity for collections (and in so doing, minimising potential chargeback claims). Establish processes and procedures associated with credit card sales consistent with the terms of processing agreements in place to maximise the recovery on all sales and provide for efficient and effective resolution of any potential dispute.
- Be Proactive and Plan Ahead.
Successful merchants, with knowledge of their credit card processing agreements, tend to carefully review and promptly challenge, as appropriate, (a) the imposition of fees and costs that are not otherwise provided for under the agreements, (b) the imposition of chargebacks, (c) the holdback of additional amounts in the Reserve Accounts, and (d) the timing of holdbacks within Reserve Accounts to avoid unnecessary delays in payment. In addition, successful merchants develop meaningful cash flow projections which will typically include some "reserve" for credit card sales based on prior experiences. Recognising that some sales do not result in immediate cash receipts can help a merchant effectively manage its cash flows.
- Properly Evaluate Payment History With Various Processors.
Monitor performance. Review chargeback and payment history with various credit card processors. Distinguish between those credit card processors that offer poor terms versus those that offer more favourable terms, and, within this analysis, how each of the credit card processors performs on its agreements. In some instances, despite tough deal terms, a credit card processor will not seek to hold back the maximum amount permitted but choose instead to hold back a reasonable amount consistent with the financial risk involved. Develop a means of evaluating reasonable behaviour amongst the processors.
- Shop For The Best Deal.
Negotiate the best terms possible, paying particular attention to the time in which the credit card processor may holdback money in the Reserve Account for potential chargebacks. In addition, pay attention to a credit card processor's past behaviour—sometimes it makes the most sense to work with a processor under less friendly terms that has a history of only taking holdbacks in the Reserve Account for actual credit risks (as opposed to general business risk). Credit card processing is a highly competitive industry—take advantage of the competition to cut your best deal. Of course, pay attention to the best rates as well!
Credit card sales represent a vital source of working capital for today's merchants. The ultimate choice of a credit card arrangement depends on finding a processor that both provides for reasonable terms and conditions and then demonstrates a consistent willingness to work with its merchants. Look for the right credit card processor for your company. Simply locking in the best rate may not be enough!
