Millennials demand for ESG
ESG factors such as corporate governance, social responsibility and environmental impact issues, like world poverty and climate change, were all significantly more important to millennials than to the older generations in their investment decision. Opinions between these two age groups differed the most on local social outcomes, like poverty and social welfare, with millennials rating these higher (7.1/10) compared to older investor groups (5.5/10), on average. The study also concluded that millennials were more likely to actively pull funds from companies that had poor ESG records, with companies associated with weapons manufacturing/dealing or use of animal testing being the primary motivation of this.
Most groups of investors are looking for good corporate governance, with the issue topping their list of ESG concerns.
However, UK millennials again appeared to show more concern rating it an average of 7.2/10 compared to older UK investors who rated it 6.6/10, on average.
ESG an alternative to short-termism
The study found that UK investors would stay invested in ESG investments longer than usual, with 69% indicating they would do this. There was a significant difference between Millennials and older investor groups on this with 89% of millennials saying they would stay invested in ESG investments longer compared to 63% of older investors.
Over a third (35%) 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.
The value of ESG
On average, UK investors rated ESG issues as less important when making an investment decision, than tangible, long-term growth, which they rated 7.7/10. However, global investors still rated positive ESG factors highly at 6.9/10 on average, indicating a high degree of importance placed on both issues. Many experts would argue the two considerations are inseparable.
Jessica Ground, Global Head of Responsible Investing at Schroders, said: “The interest in ESG and corporate governance issues for investors only looks set to grow given its prevalence amongst millennials. While returns are still the most important issue, ESG’s importance to end investors means that these factors are too big for any advisor to ignore. At Schroders we have long viewed ESG factors as contributing to investment outcomes and returns. We have been integrating analysis of them in our active fund management processes for almost 20 years. It is important to continue to educate investors on the value and added return ESG can provide.
“While many policymakers are concerned about the rise of short -termism in markets, encouragingly, those surveyed said they would stay invested in ESG philosophies longer than they would in other investments. It is important that investors recognise the value of being invested for the long term and this is especially relevant when considering ESG factors.”
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