The Millennial Movement. The Millennial Movement
By: Louise Fitzgerald Dippfs
Tags: Ethical Investment, Ethical Investing, Investing, Millennials, Investing Tips

Millennials. Generation Y. The successor of Generation X and the predecessor of Generation Z. Whatever term you know this unique age group by, they have distinct set of characteristics that make them truly pivotal in the ESG movement. Confident, ambitious, and achievement-orientated, they have high expectations of their employers and aren’t afraid to question authority or buck the trend. It is perhaps these last two behavioural traits that are the most significant when addressing ESG in particular, and what puts Millennials at the forefront of demanding societal, business and ethical change.

This demand for change is given even more weight because by 2025, Millennials will make up 75% of the workforce. This has been especially exacerbated by the Coronavirus pandemic, which has driven some older workers into early retirement, moving themselves out of the workforce earlier than they had planned, thereby reducing the overall age of the working body. though many Millennials have also been hit hard by the Coronavirus pandemic in terms of job losses, their motivation and drive are key factors that are likely to have helped them secure alternative employment in any capacity to keep money coming in and bills paid.

In another way, the Coronavirus pandemic has helped cement the fact that what we do and how we treat the planet needs to change. The eruption and spread of the virus can be put down to environmental factors, at least in part, but it is the effect of national lockdowns that have shown what a difference we can make to the planet if we don’t commute to work every day or holiday abroad so frequently. It is precisely this sort of world phenomenon that solidifies the importance of changing what we do to improve the condition of the planet.

At this moment in time, Millennials are at a critical point in their life cycle. Being anything from 24 to 39 years of age, they are in their peak saving years, and it is what they demand of their money that makes this so significant. With a solid belief that the companies they invest their money in go above and beyond simply providing good returns, environmental, social and governance issues are at the very top of their priority list when it comes to their investment criteria. They want to invest in companies whose mandates resonate with their values and they want their investment managers to challenge normal behaviour and actively work towards improving behaviour and performance. The fact is that Millennials simply think about investing differently to their parents and grandparents. They take a more hands-on approach and a more active role in deciding where their money should be invested and what they want it to achieve.

The amount of money being ploughed into these sorts of investments is further enhanced by the substantial wealth transfer that is currently taking place. Millennials are starting to receive inheritances from their baby boomer parents, giving them even more money to invest how they see fit, and thus bolstering the power they have over the investment sector and the economy.

But how can companies respond to this increased focus on ESG to appeal to this new breed of investors? There’s certainly no quick fix, but rather a multidimensional approach that needs to take place. Companies need to be able to demonstrate their support for environmental and social causes, and this is sure to involve considerable time, effort, and resources that need to be transparent and genuine. The spotlight is on greenwashing (the process of conveying a false impression of being an ESG investment option) at the moment and investors do not take kindly to being led down the garden path, especially where ESG investing is concerned. This is why companies must be genuine and open with regards to their motives.

Whatever the approach, one thing remains evident. Millennials are actively changing the investment landscape, and this will be a long-term change. ESG investing is moving to the forefront of investment decisions rather than simply being an afterthought, and the sustainability and ethical stance taken by companies is a key focus for this new generation of investors. Firms will need to jump on board and embrace this change to benefit from it, or risk being left behind.