Investments  

Younger investors 3x more likely to invest in ESG funds

Younger investors 3x more likely to invest in ESG funds

Investors between the ages of 18 and 24 are three times more likely to invest in ESG, green and impact funds than those over the age of 65.

According to the Saltus Wealth Index, 64 per cent of respondents were invested in either ESG, green or impact funds funds, rising to 80 per cent among 18 to 24 year-olds.

However this dropped to a quarter (24 per cent) for those over the age of 65.

The survey questioned 1,000 people in the UK with investable assets of £250,000+ to understand their thoughts about their investment choices.

The research showed an overall correlation with age, with ESG/green interest getting progressively worse the older the age group, with one exception: the 45-54 year-olds. 

For instance, among those aged between 25 and 34, 74 per cent had exposure to ESG/green products, dropping to two thirds (67 per cent) of 35 to 44 year-olds, and 48 per cent of 55 to 64 year-olds. But 68 per cent of those approaching the age of 55 are invested in ESG. 

Age

Likelihood to invest in ESG, green and impact funds

18-2480 per cent
25-3474 per cent
35-4467 per cent
45-5468 per cent
55-6448 per cent
65+24 per cent

Source: Saltus Wealth Index

Michael Stimpson, partner at Saltus, told FTAdviser: "[ESG] is the direction that everything is moving in. Companies not moving in this direction won't have shareholders in the long-term - they just won't offer sustainable returns.

"So with this cohort [45-54 year olds], it is possible their ESG demands come top and they are not prepared to sacrifice this for income, but we think these two things - returns and ethics - can go hand in hand.

"Therefore it is more than possible this age cohort has grasped this fact, as it would make sense they are possibly more knowledgable about the topic, and are more engaged with investing along ESG lines."

He added: "It is also possible they have engaged the right financial advice to be able to invest ethically and for returns."

When asked what the investors thought was the biggest threat to their wealth, 24 per cent of the youngest investors said climate change, compared with 11 per cent of over 65s.

When respondents who did not invest in ESG, green and impact funds were asked why, 44 per cent of under 25s said it was because they did not think it made a difference, and that green funds were not “truly environmentally friendly”.

Stimpson said: “The interesting thing re ESG, is that for people who think it is important, it becomes the number one thing, regardless of returns. 

"But if you can build a portfolio that is both responsible and builds an income, you can meet their requirements. It used to be the case that people thought they had a choice - either ethical, or returns." 

sally.hickey@ft.com