ESG Investing

3 Reasons Millennial Investors Are Impact Investors


It should be no surprise that millennial investors are poised to become major adopters of impact investing. From eschewing cars to putting off marriage, millennials have always done things a bit differently from their parents. Now that the oldest millennials, born in the early 1980s, have grown their personal wealth and are starting to take a more active role in managing family wealth, they’re making their mark on the investing space, too.

Having already witnessed multiple cycles of boom and bust, they’re less likely than previous generations to view investments as a means of getting rich quick. They tend to be more cautious—and more thoughtful—about where they put their money.

All this makes them ideal candidates for bringing the burgeoning impact investing movement into the mainstream. According to a 2015 report by the Morgan Stanley Institute for Sustainable Investing, millennial investors are nearly twice as likely as others to include socially or environmentally conscious companies and funds in their portfolios.

Here are three reasons to expect millennials to become leaders in impact investing.

1. They’re More Socially and Environmentally Conscious Than Previous Generations

Since entering adulthood, millennials have shown themselves to be more interested in the environment and in social causes than previous generations.

While two-thirds of people polled by Nielsen said that they would pay more for a sustainable product, that number jumped to nearly 75% for millennials. Millennials are also more likely to volunteer or to take a job that pays less if they feel that they’re making a difference. Now they’re bringing that awareness—and their willingness to put their money behind their beliefs—to their investing decisions.

As millennials grow into leadership roles at financial firms, they’re advancing the creation of new funds and organizations with these aims in mind. And millennial workers in other industries are demanding values-minded investments options within their 401(k) plans.

2. They Expect Transparency and Are Used to Doing Their Research

Millennials grew up reading food labels and are used to researching products before a purchase, so they have no problem performing due diligence on a company or fund before investing. Plus, it’s getting easier for them to do so. Companies typically make their mission statements available online, and there are several online tools now available that allow investors to filter funds based on various ESG performance metrics.

While more than a quarter of high-net-worth millennials already own impact investments, another 57% are interested in adding them, according to a report released by U.S. Trust. The same study found that the majority of millennials consider the social, environmental, or political impact of a fund to be an important factor when making their investment decisions.

3. They’re about to Have a Lot of Money to Invest

Just as they reach their prime earning years, millennials are set to receive a collective $30 trillion in assets from their baby boomer parents in the next few decades, according to Accenture. Millennials are also likely to take a larger part in managing family offices, putting them in charge of the direction of family wealth.

As millennial investors come of age, they’re destined to become leaders in the finance field. As they do, they’ll bring their generation’s values and habits into the broader mainstream.


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