Ethical Investing  

The importance of ethical investing across the generations

This article is part of
Guide to ethical investing

The importance of ethical investing across the generations

Millennials are, more often than not, the group to whom the growing interest in ethical and sustainable investing has been attributed.

While the younger generations may be facing up to the effects of climate change and numerous other environmental, social and governance (ESG) issues, they are also acknowledged as having far less money to invest than their parents and older generations.

So where is the investment coming from if it is not coming from the cash-strapped yet ethically conscious millennials?

It would be naïve to dismiss the older generations and the parents of millennials as having little or no interest in where their money is invested.

In other words, ethical investing and its appeal across the generations is a far more complex and multi-faceted trend.

Adrie Heinsbroek, head of responsible investing at NN Investment Partners, notes: “In the 2017 Shapers Survey (one of the world's largest surveys of young people, initiated by the World Economic Forum or WEF), 25,000 young people aged 18-35 from 186 countries shared their views on topics like the economy and global outlook, civic engagement, innovation, values and society, and business and the workplace.”

He recalls that among the 18-35 age group, they identified the most serious issues affecting the world as climate change, inequality, poverty and both food and water security, as well as general wellbeing.

“From this overview, one could conclude that most millennials’ concerns are aligned with several key elements of sustainable investments frameworks,” he points out. “At the same time, in overviews of the World Economic Forum, topics that are of concern to business executives and government officials are social instability, extreme weather events and food and water crises. 

“Semantics aside, the similarities in concerns and hopes for the planet and people are the same. This makes sustainable investing a cross-generational need and necessity.”

The generation game

The Schroders Global Investor Study 2017, published in September, breaks it down in more detail. It reveals 54 per cent of UK investors have increased their allocation to sustainable investment funds compared to five years ago.

The study, which surveyed more than 22,000 investors globally and over 1,000 in the UK, found that globally, 78 per cent of investors say sustainable investing has become more important to them.

Schroders finds this varies by generation, with 86 per cent of millennials (defined as 18-35 year olds) citing its importance to them, followed by 79 per cent of Gen Xers (36 to 50 year olds) and 67 per cent of Baby Boomers (51-69 year olds).

Figure 1: The percentage of each generation which feels sustainable investing has become more important for them over the past five years

Source: Schroders Global Investor Study 2017

John David, head of Rathbone Greenbank Investments, agrees sustainable and ethical investment is suitable for all investors who wish to reflect their values in their investments, regardless of age or wealth.