While there is a long tradition of the wealthy giving their money away to make life better for the less fortunate – perhaps most famously Bill Gates, who has given away an estimated $28billion to his foundation which is dedicated to improving education and helping people to lift themselves out of poverty – many super rich millennials are looking to do things differently. Rather than trying to change the world with traditional philanthropy they are looking to do it via impact investing.
Impact investing means investing in companies that generate social or environmental benefits. This is also often referred to as ESG investing where non-financial performance indicators in the categories of Environment, Social and Governance are used to assess the positive impact a company has. That could be anything from reducing carbon footprint to safeguarding workers’ rights, paying staff fairly or empowering under-represented groups.
The old school view of this kind of socially beneficial investment is that it was incongruous with a high return. Impact and returns were seen as mutually exclusive and this type of morally worthy investment was to be avoided unless one was content with weak returns. This has very much been the view of older generations within high net worth families but younger family members are now seeking to challenge that view and find ways to use the enormous wealth of their families to bring about change for the better.
And they are taking it very seriously, forming alliances to advance their impact investment goals. One such example is a non-profit organisation called The ImPact in the States which aims ‘to inspire families to make more impact investments more successfully.’ through the sharing of knowledge and experience.
Few of us are lucky enough to have spare millions to invest for the good of the planet and our fellow Homo Sapiens but that doesn’t mean we can’t play our part too. ESG investing is moving from the fringe to the mainstream and it is definitely possible for all of us to invest ethically and enjoy healthy returns.
Millennials are more conscious of the need for sustainability than previous generations with climate change very much the defining issue of our lives. We have inherited a planet in crisis and we can no longer ignore the warnings that are coming at us thick and fast so we must look for solutions.
A survey of 2,000 adults carried out by Good With Money showed that 60% of millennials liked the idea of a logo or label to help identify the financial providers and products which operate in a sustainable and ethical way, compared to just 36% of those over the age of 55. Investing in these companies is one way to wield some influence by refusing to put funding into those companies that are polluting the planet, or abusing human rights, and instead directing it towards greener or fairer initiatives. Of course, that doesn’t mean you have to be a millennial to invest ethically – the more who jump on board this bandwagon the better.
Whatever your age, if you are concerned about the social and environmental impact of the companies that you invest in then I’d be happy to look at your financial plan and discuss changes to your investments to bring your portfolio into line with your values. Infinity works in partnership with investment manager, Tilney, who have an Ethical Investing Specialist on board dedicated to finding the right investment solutions for those wanting to balance a desire to invest ethically and make a solid return on those investments. Let’s chat. Together we can make the world a better place.
Client Relationship Manager
I am an active member of the CII and the Personal Finance Society (PFS) and believe strongly in their code of ethics and only doing the right thing for my clients.