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Socially Responsible Investing, ESG Sparking Interest Beyond Millennials

Industry Trends and Research

socially responsible investingWhile Millennials get much of the attention for driving socially responsible investing, a new study suggests they’re not the only generation that’s interested.

Gen Xers and Baby Boomers are also expressing growing interest in applying their ideals on environmental, social and governance (ESG) issues to their finances, according to Allianz Life’s ESG Investor Sentiment Study. The study found that although Millennials are more likely to make investment and purchasing decisions based on issues that are important to them, Gen Xers and Boomers are also putting their values into action. 

Nearly two-thirds (64%) of Millennials said ESG issues are important in their investing decisions with Gen Xers not far behind at 54% and Boomers at 42%. What’s more, majorities across all generations say ESG is a key factor as to which companies they choose to do business with – registering at 77% of Millennials, 64% of Gen Xers and 61% of Boomers. 

“Millennials get a lot of attention for driving ESG investing,” notes Todd Hedtke, chief investment officer for Allianz Investment Management LLC. “But when it comes to investing in and doing business with good corporate citizens, there is interest across the board and it’s only going to grow.” 

Still, only 17% of Millennials currently are participating in ESG investing and an even lower level of Gen Xers and Boomers are doing so – at 7% and 3%, respectively. On the other hand, 66% of Millennials and nearly half of Gen Xers (49%) and Baby Boomers (47%) say they are interested in having some money in ESG investments. 

Generational Focus

When asked about the single most important issue when it comes to doing business with a company, all generations agree social issues, such as diversity in the workforce and consumer protection, are most important, followed by corporate governance issues and environmental topics. 

When it comes to making investment and business decisions, Millennials are more likely to take action based on issues that are important to them, but there are a few key issues that make Baby Boomers more likely than other generations to take their business elsewhere. These include transparency in business practices and finances, levels of executive compensations and charitable contributions made by a company. 

Opportunities Lost?

The study also found that Millennials are more likely to be interested in learning about various types of ESG information. But solid majorities across all generations acknowledge that they aren’t sure how to evaluate if the companies included in an ESG investment care about causes they support.  

Meanwhile, most financial professionals have yet to take a proactive approach helping clients learn about and participate in ESG investing, the study notes. Only 30% of respondents working with a financial professional say they have discussed ESG investing with their advisor and most of the time it was the client who initiated the conversation (69%). 

This comes despite three-quarters of respondents currently working with a financial professional saying they have positive perceptions of ESG investing, and more than half (51%) of those currently not involved with ESG investing are interested in it. 

“These stats show us that people from all generations are looking to learn more about ESG and want to put their values into action,” says Kelly LaVigne, vice president of Consumer Insights, Allianz Life. “But they feel they need more education and guidance on how to best make ESG investment decisions.” 

Finding in the study are based on an online survey conducted in December 2018 among a nationally representative sample of 1,000 respondents ages 18 years or older.