Socially Responsible Investing (SRI) is the practice of investing money in companies and/or funds that have positive social impacts. While it may seem like something new on the scene, it has been around since Biblical times. SRI’s popularity is rapidly growing today and it coincides with an increase of young investors who are leading a wave of socially responsible and sustainable investing for the greater good – the Millennials – those age 22 to 35(38).
We have previously discussed the Millennials’ passion for health, fitness, intellectual freedom and social responsibility. Therefore, it is easy to see that investments geared toward environmentally, socially and governance-friendly projects have become very popular with their generation. According to a 2018 study from Harvard University’s Kennedy School of Government, SRI now accounts for $26 trillion, which is more than quarter of all assets under professional management worldwide.
The Millennial Generation has grown up in a time when social responsibility was beginning to come to light. Environmental, social and governance (ESG) issues gained national and world-wide exposure when the United Nations launched their Principles for Responsible Investment in 2006, establishing guidelines for world-wide investors to incorporate ESG issues into investment practices. Then In 2015, the UN reinforced this approach with their Sustainable Development Goals, an urgent call to try to resolve the world’s most pressing challenges. And, even though this was seen on a large scale, it still showcased the upcoming generation’s interest in (ESG) issues, such as climate change and human rights, and started the creative wave of thinking that these practices could become an investment opportunity.
Millennials like the sound of that investment strategy, as they believe that they can make a difference, as well as making money. But it goes further than that because Millennials seem to have the mindset of creating a legacy for their children and grandchildren – a better world – a sense of Philanthropy. For the majority of individuals, “giving” is the money “given away” after they are finished investing and earning in other areas. It’s the concept that we make the money first and then give it away. However, this new generation realizes that it’s so much smarter to invest this “give away money”, thus not only earning money for their futures, but for everyone’s future.
The history of socially responsible investing shows that what is old is new again. We see that this growing movement shows no signs of slowing down, making for an even larger impact as more investors get involved. Millennials seem to be opening up the concept of “paying it forward” and as members of previous generations plan for their futures, they are picking up that feeling of aligning their heart’s desire(s) to their investment strategies. Everyone is waking up to the fact that small moves really add up when aligned with other like-minded investors. Millennials are leading the way in this collaboration.
Have a great weekend!