ESG investing is set to grow exponentially over the next decade, deVere chief Nigel Green has predicted, pointing to Millennials leading the change as they inherit the largest yet generational wealth transfer.
A global poll conducted by deVere has found around 77 per cent of people born from the early 1980s to the early 2000s cited ESG investing as their top priority when considering investment opportunities.
Mr Green commented ESG investing will explode in the next decade with the incoming wealth being transferred from Baby Boomers to Millennials.
In Australia, an estimated $3.5 trillion is expected to change hands over the next 20 years.
Mr Green has also forecast that as Millennials become the major beneficiaries of wealth transfers, institutional investors will “pile into ESG over the next few years”.
“This survey underscores that while traditional factors – such as anticipated returns (10 per cent), past performance (7 per cent), risk tolerance (4 per cent) and tactical allocation (2 per cent) – are important factors in millennial respondents’ investment decision-making, they are no longer enough,” Mr Green said.
“Millennials appear to be leading the charge in socially responsible and impactful investing. They are keen to look for investment solutions that are progressive and forward-looking. And they might be right to do so.
“Research has shown that investments that score well in terms of ESG credentials often outperform the market and have lower volatility over the long run.”
He concluded ESG principles will “fundamentally reshape the retail and institutional investment landscape in the next decade”.
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Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
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