The majority of millennials and Generation Zs demand that their investment portfolios include ESG criteria, according to a study.
In the deVere Group poll of more than 800 clients worldwide, 72.8% said it was a clear preference in portfolio allocation.
Nigel Green, the CEO of deVere Group, commented: “Over the next few decades, an estimated $68 trillion will be transferred from baby boomers and generation X to millennials and generation Z.
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The study highlighted the need for financial advisors to adapt strategies for younger clients by incorporating ESG criteria. Investment firms should develop and promote ESG-compliant products to attract younger investors, suggested the analysts. Additionally, regulators must support sustainable investing, and companies need to enhance their ESG credentials for long-term growth.
Millennials’ and Gen Z’s mindsets have been shaped by social and environmental challenges, such as climate change and social inequality, the study highlighted. Consequently, they are more inclined to seek investments that reflect their values.
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Despite the demand for ESG investments, there has been a backlash, especially in the US. Critics argue that prioritizing social and environmental goals can compromise financial returns, labelling ESG initiatives as ‘woke capitalism.’ They highlight the subjectivity and inconsistency of ESG metrics, leading to scepticism about their impact. Additionally, there are concerns that ESG investing might lead to overregulation and reduced corporate profitability, ultimately harming investors.
However, the study’s findings suggested that these criticisms are not deterring younger investors.
