When it comes to a desire to save the world, it’s not surprising that younger generations – ie. those who have a lot more time left to spend on our parched planet, are more up for it.
One way they are choosing to do this is through impact investing, so-called because funds described as “positive impact” or similar only invest in companies solving some of the world’s most pressing problems.
Younger generations are more naturally comfortable combining financial and societal ambitions when investing.
However, it’s the older generation who have more investible wealth today and whose choices help shape the investment market and the world their children and grandchildren live in.
Damian Payiatakis, Head of Impact Investing at Barclays
Two in five investors aged 40 or under, or 43 per cent have made an impact investment, according to Barclays – four times the proportion of investors aged 50 to 59 (9 per cent). The over 60s seem even more disinterested in profit with principles, with only 3 per cent of this group saying they’d made an impact investment.
The research from Barclays, which offers an impact fund on its platform, lays bare an investment priorities divide between the generations, with younger people taking an apparently more holistic view of their money.
This research backs up other similar studies, showing rising demand for ethical and sustainable investments, particularly from millennials (those born after 1980).
Barclays found that investing with consideration for social and environmental impact is becoming more prevalent generally, with the number of UK investors that have made an impact investment growing to 15 per cent in 2017, up from 9 per cent in 2015. Under 40s are leading the way, with the number of people making an impact investment rising to 43% in 2017, up from 30% in 2015.
Barclays’ research found that younger investors would allocate the highest proportions of a portfolio to investing for the good of society. Those aged under 30 would allocate three times as much of their portfolio to impact investments as those aged 60 and above.
However, Barclays sees older investors, who hold greater wealth today, as a critical group in whom to raise awareness of and engagement with impact investing. Barclays says different age groups will respond to different approaches, which the industry must capture in order to cater to the whole spectrum of investors.
Damian Payiatakis, Head of Impact Investing at Barclays, says: “Younger generations are more naturally comfortable combining financial and societal ambitions when investing.
“However, it’s the older generation who have more investible wealth today and whose choices help shape the investment market and the world their children and grandchildren live in.”
Barclays is a sponsor of a global coalition of over 1,000 collaborators, The Impact Management Project, collaborating to establish shared fundamentals on how to talk about, measure and manage impact for investors.
Damian Payiatakis believes that more needs to be done to raise awareness of impact investing, and also to demonstrate how straightforward it is. He adds: “Older individuals and families are likely to have been investing over a longer period and have existing portfolios to evolve to align their investments with their intentions.
“In line with The Impact Management Project, we’ve been developing our process to help these clients transition their portfolios. This means understanding clients’ impact ambitions alongside financial goals that then can guide how we build their portfolios and report the outcomes achieved.”
Barclays Multi-Impact Growth Fund, a fund of funds, offers a diversified portfolio of funds based on both their potential for strong financial returns and the consideration of their impact around key social and environmental issues, such as climate or demographic changes.
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