Almost eight out of 10 millennials now prioritise socially responsible and impactful investing, according to a new global survey.
Some 77% of millennials – people who were born in the time period ranging from the early 1980s to the mid-1990s and early 2000s – cite Environmental, Social and Governance (ESG) investing as their top priority when considering investment opportunities.
The global poll of 1,125 people was carried out by deVere Group, one of the world’s largest independent financial services and advisory organisations, across the UK, Western Europe, the Middle East, Africa, North America, Australia, India, ASEAN and East Asia.
deVere CEO and founder, Nigel Green, comments: “This survey underscores that whilst traditional factors – such as anticipated returns (10%), past performance (7%), risk tolerance (4%) and tactical allocation (2%) – are important factors in millennial respondents’ investment decision-making, they are no longer enough. Indeed, Environmental Social and Governance considerations now sit at the heart of that process.”
Let’s break down the ESG acronym to understand the matters that millennials deem deserving of their investment. ‘E’ is for ‘environment’ and includes issues such as climate change policies, carbon footprint, and use of renewable energies. ‘S’ is for ‘social’ and includes workers’ rights and protections. ‘G’ is for ‘governance’ and includes executive compensations, diversity of the board and corporate transparency.
Mr Green continues: “Millennials appear to be leading the charge in socially responsible and impactful investing. They are keen to look for investment solutions that are progressive and forward-looking.”
“And they might be right to do so too. Research has shown that investments that score well in terms of ESG credentials often out-perform the market and have lower volatility over the long-run.”
He goes on to say: “For this reason and, importantly, because the biggest-ever generational transfer of wealth – likely to be around $30trn – from baby boomers to millennials will take place in the next couple of years, ESG investing is set to grow exponentially in the 2020s.”
“As responsible investing becomes increasingly mainstream, and millennials become the major beneficiaries of the transfer of wealth, we can also expect institutional investors, such as pension funds, amongst others, to pile into ESG over the next few years.”
The deVere CEO concludes: “Environmental, social and governance issues are now the top priority for millennials. “They understand that it is perfectly possible – and increasingly necessary – to make a profit while positively and proactively protecting people and the planet.”
“These principles will fundamentally reshape the retail and institutional investment landscape in the next decade.”