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Mar 01, 2015

Millennials to accelerate shift to responsible investment

Investors born since early 1980s are more likely to invest according to ESG criteria

Millennial investors in the US are much more likely than older investors to opt for funds and companies with solid ESG policies, heralding a major acceleration of responsible investment in coming years, according to a Morgan Stanley survey.

Eighty-four percent of active millennial investors, or those born between the early 1980s and the first few years of the new millennium, say they are interested in sustainable investing, compared with 79 percent of Gen Xers and 66 percent of baby boomers, Morgan Stanley concludes in its latest Sustainable Signals report.

‘As millennials begin to accumulate more wealth and invest accordingly, their perceptions of sustainability are likely to have a significant impact on the financial services sector,’ the report authors write. ‘Asset managers creating investment products for individual investors cannot ignore these trends.’

More than a fifth (22 percent) of active millennial investors also say they would invest in funds that target specific social or environmental outcomes, compared with 12 percent of all investors, the report notes. At the same time, 15 percent of these investors say they would exit a company because of objectionable corporate activity, compared with 9 percent overall.

The study shows female investors are also leading a push toward responsible investment, with three quarters of women saying they are interested in responsible investment, as opposed to 62 percent of men. Forty 40 percent of female investors also say they consider the impact of their investments before committing, while only 23 percent of men do the same.

Morgan Stanley says women are likely to have an increasingly large impact on investment overall in coming years, particularly in the US, as women are earning more university degrees than men and now account for 52 percent of all professional and managerial jobs in the country. The report says women also currently control about 39 percent of investable assets in the country, or about $11.2 tn.