Support for ESG has plummeted among Millennial and Gen Z investors, typically the strongest backers for environmental, social and governance-related issues, as a more turbulent financial outlook tempers enthusiasm, according to a survey from Stanford University and the Hoover Institution.
Less than half of millennial and Gen Z investors, those aged 41 and younger, said they were “very concerned” about environmental issues this year, down from 70% in 2022. That same group is now much less willing to give up market returns to meet their ideals, according to the survey of about 1,000 investors conducted this fall.
Higher borrowing costs helped spur a $30 billion slump in U.S. clean energy stocks over the past six months. Those companies had been seen as likely to flourish with passage of the Inflation Reduction Act, which promises billions of dollars for America’s switch to clean energy.
“This last year was somewhat of a gut check,” said Amit Seru, one of the study’s authors and a professor at the Stanford Graduate School of Business and a member of the Hoover Institution working group on corporate governance. “When interest rates go up, inflation shoots up and people certainly grapple with reality.”
A few years ago, millennial and Gen Z investors were described by consultants as key drivers of the boom in ESG investing because of their concerns about climate change, as well as gender and racial inequalities. Conservative investors have led the criticisms against ESG, calling it “woke capitalism” that’s more focused on social concerns than generating profits.
It’s not clear whether the erosion of support is a blip or will be long-lasting, Seru said. The shift puts younger investors more in line with the older investors, those over 58, who continued to express very little concern about ESG topics, according to the survey.
“You’re inherently more liberal when you’re just coming out of college,” said David Larcker, another author of the study and a professor at the Stanford Graduate School of Business. “All of a sudden the bills come due and you kinda go, ‘Yeah, we’re pro this, but we’re not gonna give up everything to push this forward.’”
The pandemic hit and internships were in chaos but Hannah Moore saw an opportunity.
RIAs need to find universities that offer financial planning programs and sponsor or host events, advisor suggests.
The leading wealth tech provider is helping more advisors access active ETF models through its exclusive partnership.
Case of once-wealthy family highlights risks, raises questions on firms' duties to sophisticated investors suffering cognitive decline.
“The evidence in this case was overwhelming,” says an attorney.
Uncover the key initiatives behind Destiny Wealth Partners’ success and how it became one of the fastest growing fee-only RIAs.
Key insights from Gabriel Garcia on adapting to demographic shifts and enhancing client experience in a changing market