News analysis
Older investors shun ESG investing
A new study on ESG investing reveals that young and old investors have diametrically opposed views of ESG (environmental, social and governance). Older investors are not persuaded by ESG, while younger investors want to invest in firms with solid ESG practices.
How do we know this?
In the summer of 2022, Stanford Graduate School of Business, with others, conducted a nationwide survey of 2,470 US-based investors.
The aim was to understand how American investors view environmental, social, and governance (ESG) priorities among the companies in their investment portfolio.
What were the results?
- Depending on their age, investors have diametrically opposed views on ESG.
- It is vital to young investors that fund managers advocate for environmental and social causes. Older investors want them to stick with generating financial returns.
- To support ESG causes, young investors are willing to lose between 6 and 10 per cent of their retirement savings. Older investors do not want to lose anything.
- Young investors believe they are more knowledgeable about the stock market than older investors. Additionally, they expect future growth to be higher.
- The survey found that investors invest with managers who share their views no matter what age they are.
- Without regard to their view of ESG, investors want fund managers to take their personal opinions into account when voting for shares.
ESG investing trends are clear
Older investors don’t pay much attention to diversity. Most older investors said they were unwilling to lose any money to support diversity.
When it comes to specific ESG issues, the survey found that investors care more about environmental issues than social issues and governance.
The old don’t want to risk their money
According to the survey, investors over the age of 58 were the least likely to support ESG objectives, while investors between the ages of 18 and 41 were most likely to risk their savings.
A third of younger investors said they would sacrifice 11% to 15% of their retirement to encourage companies to be more racially and gender diverse.
You can download the full report here.
