Table of contents:
Millennials and Generation Z are driving the development of sustainable financial products. Sustainable and ESG-compliant investments are mandatory for these generations across the board.
They are considered to be the first digital natives. You are the first to really feel climate change. You have to master digitization and pay for the consequences of the corona pandemic. They are looking for a way that enables them to reconcile work, leisure and family better than the generations before them. And don't want to make any compromises. Not even when it comes to investments. The highest possible return is just as little the all-important criterion as the job is for the meaning of life.
We are talking about the millennials or Generation Y, those born between 1980 and the late 1990s and the generation Z following them (born from around 1995 to 2010) who are now about to enter professional life or are already there have taken their first steps in their careers. And usually just as little can begin with the traditional world of work with permanent jobs and working hours as with traditional forms of investment. Above all there are questions about the meaning and consequences of decisions. And when it comes to investments, the ESG criteria are not just a nice-to-have but an absolute must.
Sustainable thinking on a broad level
This can be proven by a wide variety of independent studies. According to a Morgan Stanley analysis from 2019, 95 percent of all millennials are interested in sustainable investments. Three quarters (75%) of them are convinced that they can make a contribution to combating climate change with their investments and 84 percent believe that their investments can make a contribution to fighting poverty and for a fairer world. Generation Z young adults are in the same vein. According to a study carried out in 2017 by the market research company Cone Communications, this generation is practically unanimously (94%) convinced that it is the duty of companies to take action against grievances in the social and environmental areas and initiatives to promote equality and justice to put.
The same sustainability thinking that they display themselves by campaigning for agendas such as climate change, plastic waste in the sea, the deforestation of rain and natural forests or the preservation of biodiversity by paying attention to sustainability in their daily shopping, eating less meat and For the sake of the global climate, companies are also required to refrain from air travel or car journeys wherever possible. 57 percent of millennial investors have already withdrawn investments from companies because their products, offers or policies did not meet sustainability criteria or they deliberately did not invest in these companies.
Trillions for sustainability
And that is why the digital natives are breaking new ground when it comes to investing. "Swipe to invest" is the title of MSCI Research's study published in March 2020, which examined how millennials with higher incomes feel about ESG investments. "The market for sustainable ESG investments is driven by millennials who make their investments in line with their personal values," said Julian Seelan, an expert on sustainable investments at Earnst & Young (EY). At the same time, this also means:
A 2018 study by Bank of America Merrill Lynch made a conservative estimate that millennial investors - and especially those with higher incomes - will invest $ 20 trillion in ESG funds over the next two decades; almost as much as all the companies listed in the S&P 500 Index are currently worth together. The estimate is based on the dynamic development of the previous 15 years. During the period, sustainable investments had an average annual growth rate of 13.6 percent, and between 1995 and 2018, assets invested in sustainable US funds multiplied from $ 639 billion to $ 12 trillion.
In view of the corona pandemic and the climate crisis, numerous fund and asset managers assume that this development will continue to gain momentum. Behind this assumption is another notable metric: Millennials and Z-lers will inherit an estimated $ 30 trillion from their parents 'and grandparents' generations over the next few decades. A gigantic fortune, which - also because they have to make provisions for their own old age - will largely invest specifically in sustainable financial products. Because if the sustainability criteria are not met, this also means for you that there is an outdated business model behind it with no great future.