Millennials are taking a stand against climate change. That’s according to a new BanklessTimes.com data presentation. The site affirms that Millenials feel they have a personal stake in the planet’s future. They are, therefore, increasingly looking to their investments to reflect their values. It reports that 85% of millennials think how they spend their money can make a difference in climate change.
BanklessTimes CEO Jonathan Merry has weighed in on the findings. He says Millennials are more likely to consider environmental, social, and governance (ESG) factors when investing than older generations. ESG factors include a company’s carbon footprint, employee diversity, and charitable giving. Investing in this way is becoming increasingly popular as investors want to ensure their money is doing good in the world.
Millennials are acutely aware of the world they’re inheriting and the pressing challenges they face. Thus they’re looking for ways to align investments with their values and make an impact. What we’re seeing is a realignment of priorities for this generation. They want to ensure their money is working for them today and for the world they’ll inherit tomorrow.
BanklessTimes CEO Jonathan Merry
Why are Millennials Pursuing ESG Investments
There are several reasons why Millennials are so interested in ESG investing. For one, they have a lot of money at stake. They now account for the majority of American workers, and they expect to inherit $68 trillion from their Baby Boomer parents in the next decade.
Moreover, they’re the most environmentally conscious generation yet, as they’re already used to making choices beneficial to the environment. Many often call them “the green generation,” as they’re more likely to recycle, drive hybrid cars, and use reusable bags. They’re also more likely to care about climate change than older generations.
In addition, Millennials are accustomed to working for companies with social missions. They want to work for firms that share their values and make a difference in the world. Sustainable investing allows them to do just that; they can invest in companies with positive social and environmental impacts.
Challenges of ESG Investing
ESG investments, though lauded for their many positives, also have challenges. First, it can be difficult to determine which companies have good ESG practices. Many companies claim to be environmentally friendly or socially responsible, but it can be difficult to verify these claims. In addition, there is no standard definition of what constitutes a good ESG practice, so different investors may have different opinions about what is important.
The second challenge is that ESG investments can be riskier than traditional investments. This is because a company’s financial performance is not the only thing that matters when assessing its risk; investors must take into account the impact of its operations on society and the environment.
For example, a company that has good environmental practices but poor social practices may be more likely to experience financial difficulties than a company with poor environmental practices but good social practices.
Finally, ESG investments can be more expensive than traditional investments. That’s because companies with good ESG practices tend to be more costly to invest in than those with poor ESG practices. This is because investors are willing to pay more for companies with lower environmental and social risks.
Despite these challenges, ESG investments are still growing in popularity. The growth is due to the amount of people sharing the belief that it is essential for businesses to consider the environmental and social consequences of their actions. They believe investing in companies with good ESG practices is a way to promote this type of behavior.