More than a quarter (27%) of millennials would take their investment out of a company if it faced allegations of misconduct or unethical behaviour, despite it achieving high returns, versus just 9% of those aged between 55 and 64, according to statistics from Rathbone Investment Management.
The firm found that millennials rate ethical investing as the second most powerful way to contribute money towards positive social and environment impact, with almost a quarter stating the best way is to invest in managed funds that are ethically screened.
The study revealed that high-net worth (HNW) millennial investors are even more ethically minded, with 41% claiming they would remove their investment from a company if it received allegations of unethical behaviour.
Furthermore, almost a third of millennials said they ensure that funds are ethical before investing, compared to just 7% of those aged between 55 and 64, and 8% of 18 to 24 year olds claimed they place a higher importance on a company’s ethics rather than the potential returns it could generate.
Across the UK, ethical investing is now worth £16bn and is steadily growing, with it becoming increasingly easier to invest ethically since the number of socially responsible funds is rapidly increasing. For example, according to the London Stock exchange, ten environmentally or socially responsible equity traded funds (ETFs) have been listed in London so far in 2018, compared to just six throughout 2017.
The performance of ethical funds is also improving. Fund researcher Lipper identified 12 funds available in the UK that on average outperformed the FTSE All-Share index over a five-year period.
Commenting on the findings, Rathbone Greenbank Investments head John David said: “There is a growing concern among investors about the need to ensure that investments are socially responsible and these figures suggest that millennials, and especially HNW millennials, are leading the way.
“As millennials come of age and begin to think seriously about investments, it is clear that this generation is taking a different approach towards saving – one that looks at social and environmental impact as well as financial return.”
“While this is happening, ethical investing has at the same time become easier than ever, with an increased number of investment options available and better performance.”
David added that these developments will be “welcomed” by many, adding that interest in ethical investment has been on the rise for a number of years but is achieving “unprecedented prominence” at the moment.
“It is a trend that is not going to go away – and it affects not just the fund management industry but all of UK business,” he concluded.
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