'Not just money and math': Young people are willing to sacrifice returns for ESG
- Media Manager
- Aug 26, 2023
- 2 min read
CNBC
Written By: Alex Harring
Published: August 27th, 2023
Young people are more likely to give up returns on investments to invest in ways that support causes they care about, new data shows.
The behavior can be connected to a need among young people to signal their values, one behavioral scientist said.
The data comes as the environmental, social and governance framework finds itself in hot water politically.
When Hannah Cohen invests in a stock or fund, one thing she looks for is if the mission aligns with her personal values. For example, the 25-year-old data consultant has invested in funds like the ALPS Clean Energy ETF and the Global X Autonomous & Electric Vehicles ETF as someone who cares about climate change. In the same vein, big-oil stocks are largely out of the question.
“It sends a message that people are interested and that people do care,” Cohen said. “I don’t know how much of a difference I as an individual am making, but I do think it’s important to at least play a part and show that I’m invested physically, but also emotionally, in these causes.”
Recent survey data indicates that Cohen isn’t alone. Nearly two-thirds of Gen Z investors want to allocate their portfolios in a way that supports causes they care about, according to a July survey of some 4,000 current and aspiring investors by U.S. Bank.
That’s compared with 59% of millennials, 45% of Gen X and 30% of boomers.
And active young investors are willing to give up returns to see that goal through. The survey found more than four-fifths of Gen Z and millennials would be willing to underperform the S&P 500′s 10-year average return of 12% to ensure that the companies where they’ve invested align with their belief systems. Only 73% of Gen X and 65% of boomers said the same.
