Millennials Call On Investment Firms For Better ESG Information

A study entitled Millenials & Responsible Investment conducted with Kepler Cheuvreux of 540 investors, 79% of whom were millennials, found over 80% of millennials were interested in making responsible investments.

However, while they were receptive to the theme, only 9% were currently invested in a fund focused on sustainability. About half of respondents said perceived lower returns and higher fees associated with these types of funds would deter them from investing.

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Will Oulton, global head of responsible investment at First State Investments, said: "The questions of returns and long-term value are persistent and pervasive.

"There is a knowledge gap there. Millennials say they are interested, but want to know more before making an investment."

Some 82% said more education was needed to drive interest in socially responsible investment and 40% thought there was a lack of information about the sustainable performance of funds.

The report said: "While a slight majority of 57% of millennials thought the application of ESG would boost long-term returns, some responses indicated more promotion of how sustainable businesses are more profitable, especially over the longer term, was indeed required.

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"This reflected a more thorny issue of the perception of RI as sometimes requiring a sacrifice on returns.

"Standards and regulations exist for how fund performance is to be displayed, but no such standard exists as yet for how to disclose the ESG performance of portfolios.

"The financial services industry is arguably ill-equipped to capture this emerging interest and many things can be done by all parties in the investment ecosystem to nurture, develop and gain from growing interest in responsible investment."

First State suggested investment managers should disclose ESG outcomes alongside financial performance against an industry-agreed framework, offer ESG-integration examples, provide resources to educate clients, develop ESG expertise across organisations and have part of portfolio managers' incentives tied to the quality of their ESG integration process.

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Platform providers were also encouraged to provide more ESG information, offer a greater selection of ESG investments and develop technology to provide an ‘at-a-glance' overview of a fund's ESG profile.

Oulton said: "You can no longer just continue to provide the outcome of a fund in a percentage form versus its benchmark, you need to have a holistic view and show what you are doing beyond the long-term performance because the next generation are going to want this information."