Ethical Investing  

Millennials focus on ethical issues when picking investments

Millennials focus on ethical issues when picking investments

Millennial investors are more likely to focus on environmental, social and corporate governance issues (ESG) when selecting investments than older investors, according to a new study by Schroders. 

The Schroders Global Investor Study 2016 found investors aged 18 to 35 gave environmental, social and corporate governance factors the same importance as investment outcomes when choosing their investments. 

The survey of 1,000 investors also found UK investors would hold environmental, social and corporate governance issue investments for an average of two years longer than standard investments.

In making investment decisions, millennial investors placed greater importance on issues such as corporate governance, environmental impact concerns, such as climate change and world poverty, than older generations, the report says.

Younger investors were also more likely to pull money from companies with poor ESG track records, such as those testing their products on animals or associated with weapons manufacturing or trading. 

Nearly 90 per cent of the millennial investors said they would hold ESG investments for a longer period than conventional investments, compared to just 63 per cent of older investors. 

“The interest in ESG and corporate governance issues for investors only looks set to grow given its prevalence amongst millennials," said Jessica Ground, global head of responsible investing at Schroders. 

"While returns are still the most important issue, ESG’s importance to end investors means that these factors are too big for any adviser to ignore." 

But financial advisers questioned the study's findings, arguing that millennials "do not invest". 

"Surveys have fairly consistently shown that many investors are well disposed to the concept of responsible investing, but this has never really translated into actual fund flows which remain tiny into ESG funds," said Jason Hollands, managing director of business development and communications at Tilney Bestinvest.

"And while millennials may be particularly well disposed to such an approach, they are also a demographic group that largely do not invest as unsurprisingly they are busy clearing student debt, trying to get a foot on the property ladder or financing a family."

Brian Dennehy, managing director of Dennehy Weller and Co, agreed. "A survey is one thing but in the real world we just do not see this," he said. 

"Once those millennials have larger sums to invest they will be much more concerned about performance and profit than principles."