Almost 8 out of 10 millennials now prioritize socially responsible and impactful investing, according to a new global survey.
The global poll of 1,125 people by independent financial services and advisory organization deVere Group identified that 77 percent of millennials, or those born between 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.
“Millennials understand that it is perfectly possible, and increasingly necessary, to make a profit while positively and proactively protecting people and the planet,” deVere CEO and founder Nigel Green said. “These principles will fundamentally reshape the retail and institutional investment landscape in the next decade.”
The first component of the ESG credentials refers to “environment,” which refers to the consideration of issues such as climate-change policies, carbon footprint, and use of renewable energies. Meanwhile, “social” includes workers’ rights and protections. Last, “governance” covers executive compensations, diversity of the board and corporate transparency.
“Research has shown that investments that score well in terms of ESG credentials often outperform the market and have lower volatility over the long-run,” Green said. “For this reason and, importantly, because the biggest-ever generational transfer of wealth—likely to be around $30 trillion—from baby boomers to millennials will take place in the next couple of years, ESG investing is set to grow exponentially in the 2020s.”
Green added that 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, among others, to pile into ESG over the next few years.