So, according to recent research of 20,000 end investors in 28 countries, millennials are ranking ESG on par with investment outcomes when making investment decisions. Actually, it has been millennials that have been driving the growth in the sustainable investment market.
I am a millennial and I thought I was an anomaly by thinking about what my pension is going to be doing over the next 40 years. It turns out, I’m not. When I spoke to quite a broad range of my friends and contemporaries, both politically and professionally, one friend says that she wants her pension to be helping reduce the cost of renewable energy. Another friend wants his investments and his pension to be helping towards ground-breaking cancer [research]. Another friend is really frustrated with the lack of diversity and wants to invest in companies that are actually doing something about this seriously because diversity is really important to her.
So, my friends are actually concerned about the perception of financial trade-off when investing sustainably, but when I told them that actually sustainable investing can perform on par and sometimes above traditional investments, they actually wanted to find out more. The impact to environment and society is really, really important to them and now they are realising that they can make a difference and they want to make a difference, which perhaps has been different in previous generations.
One of the growing tasks for pension schemes now that the people who will be using their pensions will be the younger generations, is how to think about and how to work with their defined-contribution beneficiaries on environmental and social topics and actually, what their expectations of the pension scheme are. In return, asset managers are really now having to think about how they define ESG, what it means for their clients, and how they can create products that actually do what they say on the tin and are not just greenwash.
Victoria Barron considers why pension schemes will have to respond to the changing needs of millennial investors.
Newton defined contribution investments
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