Millennials are more likely to place greater importance on environmental, social and governance (ESG) factors than older investors, and rank them as highly as investment outcomes when considering investments decisions, a study has found.
The Schroders Global Investor Study found the investment decisions of those aged 18-35 were far more influenced by ESG factors than those of investors aged 36 and over.
Opinions between these groups differed most on world-based social outcomes, such as poverty and climate change, with millennials rating these highly (7.2/10) compared to older investor groups (6.4/10) on average. The study also concluded millennials were more likely to actively withdraw their capital from companies with poor ESG records, companies associated with weapons manufacturing/dealing or linked to repressive regimes would be the primary causes of this.
Nonetheless, most investors want good corporate governance, with the issue topping the list of ESG concerns across age groups. However, millennials again were somewhat more concerned than their forebears, rating it 7.4/10 in terms of importance on average, compared to older investors rating it 7.0/10.
The study also highlighted that global investors would hold ESG investments for an average of 2.1 years longer than usual investments, with 38% saying they would do this.
On average, global investors rated ESG issues as less important when making an investment decision, than tangible, long-term growth, which they rated 7.8/10. 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 interest in ESG and corporate governance issues only looks set to grow given its prevalence amongst millennials, and these factors are too big for an advisor to ignore.
The Schroders Global Investor Study 2016 surveyed 20,000 end investors in 28 countries.
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