G is for Growing Interest in "Impact Investing" with Millennial’s
Impact investing refers to investments “made with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return.”
It differs from socially responsible investing (SRI) which only seeks to avoid investments in companies with poor environmental and social practices. Impact investing goes a step further by investing in businesses based on environmental, social, and governance (ESG) principles. These businesses have the potential to create positive economic, social and environmental impact.
Why do millennial’s investment interest matter?
The financial, economic and sociopolitical prominence of “millennial” generations is growing at a fast pace. The Millennial generation already accounts for 27% of the global population holding 17 trillion in the world’s private wealth, and by 2020, it is estimated that millennial wealth and income growth could amount to approximately 24 trillion. Many experts predict Millennial’s currently ages 22 to 29, will benefit from one of the largest inter-generational wealth transfers in history.
The best news is many of the millennial investors wish to incorporate their values when choosing an investment. Meaning they will be providing capital to companies that address today’s world challenges and provide a positive impact on society such as providing sustainable agriculture and clean technology.
The days of making money on wall street regardless of company ethics and policy are changing rapidly as the pressure rises across all generations to provide sustainable investments that offer solutions for today’s social problems.
However, it will be the millennial’s, with their access to an enormous amount of future capital that will initiate the use of private wealth for public good. They will demand investments that provide progressive solutions and purposeful projects. When three-quarters of the population want a measurable social or environmental return on their investments, wall street will have to listen, and the need for change will become inevitable.
Many of today’s investment management companies are incorporating investments that offer sustainability, clean energy and positive social impact for the growing population of people who wish to include investing with ethical, social responsibility and conscientious that benefits humanity.