Millennials ‘Lead the Charge’ for Sustainable Investing

Interest in sustainable investing has held steady, and in some cases, has grown. And this is particularly true among individual investors, led by Millennials who increasingly see this as a desirable element of their investment portfolio, according to new survey results.

Morgan Stanley’s Institute for Sustainable Investing’s 2017 survey found that 75% of investors and 86% of Millennials are interested in sustainable investing. This appears to be a consistent showing from the 2015 study, which registered 71% and 84%, respectively. While these numbers are statistically similar, the level of interest among Millennials jumped 10 percentage points from 28% who were “very interested” in 2015 to 38% in 2017.

Similar to 2015, the survey of 1,000 total active individual investors tracked both how investors perceive sustainable investing and whether they are acting on that interest. Factors include screening investments for alignment with personal values and interest, investing in companies targeting social or environmental goals, and exiting investments associated with perceived objectionable activity, the report explains.

Adoption Rate

While the data shows strong interest in sustainable investing, the actual adoption rate still lags behind somewhat, although it is on the upswing. The results show the adoption of sustainability-minded investment decisions rose to 38% for overall investors in 2017, up from 32% in 2015.

The 2017 results also show that investor attention to sustainability factors has jumped to the investment space from the consumer space. A significant majority of investor respondents (89% of Millennials and 80% overall) say they are more likely to adopt sustainable investments if they can tailor those investments to their own impacted interests. Moreover, 90% of Millennials are interested in pursuing sustainable investments as part of their 401(k)s, compared to 72% of the overall investor population, according to the findings.

The authors further suggest that sustainable investing could be used as a recruiting tool. Companies that are able to “provide Millennials with 401(k) options that can better align their portfolios and careers with their values could be at a competitive advantage,” the report contends.

Trade-Offs

Meanwhile, despite the interest in sustainable investing, Millennials do show a side of cautiousness, as nearly 60% of respondents believe sustainable investing “necessarily involves a financial trade-off.” While the numbers are still low, more Millennials now believe it goes “against an investor’s responsibility to do anything other than maximize profits,” with 15% strongly agreeing with this statement, up from 8% in the previous survey, the report notes.

Interestingly, the report further explains that those who strongly agree that a trade-off exists between sustainability and financial gains “are more likely to have taken a sustainability-oriented action.” For example, the report notes that 25% of those who strongly agree that there is a trade-off have also exited an objectionable investment, compared with 11% of the total individual investor population.

Brunswick Insight conducted the research and based the results on a 51-question online survey of 1,000 total active investors conducted Feb. 17-22, 2017.

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