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The Markets November 28, 2016
More Importance Placed on ESG Investments by Millennials
The Millennial generation ranked ESG factors as equally important as investment outcomes when considering investments decisions, according to a survey.
Reported by Rebecca Moore
With one-third of institutional investors planning to increase portfolio allocations to impact investing in the coming three years and investment providers that serve retirement plan sponsors seeing opportunities for outperformance in environmental, social governance (ESG) investments, it may be of interest that a survey found Millennials (ages 18 to 35) are more likely to place greater importance on ESG factors than other investors (ages 36 and older).
According to the Schroders Global Investor Study 2016, which surveyed 20,000 end investors in 28 countries, the Millennial generation ranked ESG factors as equally important as investment outcomes when considering investments decisions.
Opinions between the two age groups differed the most on world-based social outcomes, like poverty and climate change, with Millennials rating these highly (7.2 out of 10) compared to other investors (6.4 out of 10), on average. The study also concluded that Millennials were more likely to actively pull funds from companies with poor ESG records, companies associated with weapons manufacturing/dealing and those linked to repressive political regimes.
Most groups of investors are looking for good corporate governance, with the issue topping their list of ESG concerns. However, Millennials again appeared to show more concern, rating it an average of 7.4 out of 10 compared to older investors rating it 7.0 out of 10.
The study found that global investors would stay invested in ESG investments longer than usual, with 82% indicating they would do this. More than one-third (38%) said they would stay invested in companies with positive ESG philosophies for at least two years longer than they would stay invested in their usual investments.
On average, global investors rated ESG issues as less important when making an investment decision, than tangible, long-term growth, which they rated 7.8 out of 10. However, global investors still rated positive ESG factors highly at 6.9 out of 10 on average, indicating a high degree of importance placed on both issues.
“The interest in ESG and corporate governance issues for investors only looks set to grow given its prevalence amongst Millennials,” says Jessica Ground, global head of Responsible Investing at Schroders.
For more information about the study results, visit www.schroders.com/us-gis.