ESG factors now top priority for millennial investors

Environmental, social and governance (ESG) factors are now the top priority for millennials when considering investment opportunities, research from the deVere Group has uncovered.

After surveying 1,125 investors worldwide, the financial advisory firm found that 77% of those born between the early 1980s and mid-1990s rank ESG as their top priority.

Anticipated returns, past performance, risk tolerance and other traditional factors are also important for investors, but were only cited by 10% or less of millennial respondents.

Nigel Green, CEO of the deVere Group, said: “Investments that score well in terms of ESG credentials often outperform the market and have lower volatility over the long run.

“For this reason, and because the biggest-ever generational transfer of wealth – likely to be around $30trn (£23trn) – from baby boomers to millennials will take place in the next couple of years, ESG investing is set to grow exponentially in the 2020s.

“As responsible investing becomes increasingly mainstream, we can also expect institutional investors, such as pension funds, to pile into ESG over the next few years.“

The survey was carried out across Europe, North America, Australia, India, Asia and the Middle East.

It comes after the Thinking Ahead Institute found that assets managed in ESG mandates by the world's 500 largest fund managers rose by almost a quarter in 2018.

The findings show that ESG mandates grew by 23.3% in 2018, while total assets under management fell 3% from the previous year to $91.5trn.

The study also found that assets managed according to ESG principles grew 17.8% in 2018, while client interest in sustainable investing, including voting, rose 83%.

“Millennials appear to be leading the charge in socially responsible and impactful investing,“ Green continued.

“They understand that it is perfectly possible – and increasingly necessary – to make a profit while positively and proactively protecting people and the planet.

“These principles will fundamentally reshape the retail and institutional investment landscape in the next decade.“

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