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November 30, 2016updated 04 Apr 2017 1:20pm

ESG factors continue to gain momentum among millennials: Schroders

Millennials, people between the ages of 18-35, are more likely to place greater importance on Environmental, Social and Governance (ESG) factors than older investors, according to a survey report published by Schroders.

By Verdict Staff

Millennials, people between the ages of 18-35, are more likely to place greater importance on Environmental, Social and Governance (ESG) factors than older investors, according to a survey report published by Schroders.

The Schroders Global Investor Study 2016, which surveyed 20,000 end investors in 28 countries, also highlighted that global investors would hold ESG investments for an average of 2.1 years longer than their usual investments.

ESG factors such as corporate governance, social responsibility and environmental impact issues, such as world poverty and climate change, were all significantly more important to millennials than to the older generations in their investment decision.

Opinions between millennials and the older generations differed the most on world-based social outcomes, like 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 revealed that millennials were more likely to actively pull funds from companies with poor ESG records, companies associated with weapons manufacturing/dealing or linked to repressive regimes would be the primary causes of this.

The study found that global investors would stay invested in ESG investments longer than usual, with 82% indicating they would do this. Over a third (38%) 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.

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. 

Schroders global head of responsible investing Jessica Ground 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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