Millennials Lead The Way to More Social Impact Investments

May 8, 2018 1:09:00 PM / by Hans Kramer | 2 minute read

Investments in sustainable initiatives will continue to increase in the coming years. This is evident from a large study by Schroders Investment Managers. In their Global Investor Study 2017, they did a survey with more than 20,000 active investors from 30 countries in all parts of the world about the sustainability of their investments. People from Australia, Brazil and the USA, but also from Germany, Italy and the Netherlands.

The main conclusion of the research is that sustainable investment have become more important in the world over the past years. But also that there is still a long way to go before sustainable investment is generally seen as an effective way to have a positive impact on the world. Further growth can be stimulated by informing investors more about how such impact investments generate both financial and social returns. And there is a demand for that. A third of the surveyed investors would like to know more about investments that have a positive social impact.

  

Sustainable Investment Becomes More Important 

The Schroders researchers conclude that the attitude towards sustainable investment is changing. More than three-quarters of those surveyed find sustainable investment more important now than five years ago, and nearly two-thirds now hold more sustainable investments in their portfolio.

The best known impact investment aspects are investments in companies that are likely to be more profitable because they proactively prepare for the changes in society and the environment. Slightly less well-known are investments in companies that score well when it comes to social and environmental issues or the way in which the company is managed. Investments that specifically avoid companies operating in controversial areas, such as producers of alcohol, tobacco or weapons, are the least often mentioned aspect of impact investing.

 

Sustainable Habits and Investments

Respondents work on their sustainable behavior in a variety of ways. For example, almost three-quarters of them reduce or recycle household waste and 44% buy organic food. But investing impact in order to have a positive social impact is less common. Only 42% prefer sustainable investment funds over other types of funds as a way to contribute to a more sustainable society.

Sustainable habits in a country appear to be predictive of the tendency to invest in sustainable initiatives. Countries where people have more sustainable habits are also more inclined to invest in sustainable funds. In the five countries with the highest percentage of people who demonstrate sustainable behavior, on average 65% invested on a sustainable basis, while in the five lowest classified countries, that is only 27%.

  

Millennials Set a Good Example

Only among millennials (born between 1981 and 2000) the researchers see that more than half are most inclined to choose sustainable investment funds. By comparison, this percentage is 40% of generation X (1965-1980) and even only 31% of baby boomers (1946-1964). The main reason is that millennials are better informed about the subject. They are twice as often able to name all three aspects of impact investing as baby boomers.

Millennials are most convinced of the importance of impact investing, and also invest more often in sustainable initiatives. 88% of millennials believe that sustainable investment is now more important than five years ago, and 70% has invested more in sustainable funds. The same trend is also seen in generation X and baby boomers, but to a slightly lesser extent.

 

Europe Lagging Behind

In North and South America, the United Arab Emirates and South Africa more than 80% find impact investing more important than five years ago. In Europe the change is slightly smaller, but still remarkable: three-quarters of the respondents say that this theme is more important. This also means that investors invest more often. In North and South America nearly 70% have made more sustainable investments, while Europe is also lagging behind the global average of 64%. Only a bit more than half of the interviewees in Europe have invested more in sustainable initiatives. So, there is plenty of work to do.

Topics: impact investing, duurzaam investeren

Hans Kramer

Written by Hans Kramer

Stories have always been a significant part of people's lives, and still are. They make us grow. In knowledge, wisdom and inspiration. Relevant stories bind us together. I proudly tell Lendahand's story of impact investing, e.g. via the press or social media and hope to inspire you.

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