Young investors have weakened their stance on ESG, study reveals

Young investors have weakened their stance on ESG, study reveals
Gen Z and millennials are less prepared to give up returns to meet their ideals.
DEC 12, 2023

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.’”

Latest News

Jailed Florida broker, facing sexual battery charge, ghosts FINRA
Jailed Florida broker, facing sexual battery charge, ghosts FINRA

The regulator has been trying to reach imprisoned advisor Jason Foley.

Microsoft's AI workforce reset targets 27% of global staff in new buyout
Microsoft's AI workforce reset targets 27% of global staff in new buyout

Magnificent 7 firm continues to ‘right size’ workforce in AI-related shift also seen in financial services.

HSA investing gap creates retirement planning risk for clients
HSA investing gap creates retirement planning risk for clients

Healthcare inflation running at 280% of CPI - and most HSA holders are sitting in cash.

High-growth retirement plan advisors gain AUM faster, BlackRock data shows
High-growth retirement plan advisors gain AUM faster, BlackRock data shows

New research identifies the practice habits driving 121% DC AUM growth among the industry's top performers.

Elder fraud losses hit $3B as investment scams surge 42%, FTC says
Elder fraud losses hit $3B as investment scams surge 42%, FTC says

Six-figure losses, social media lures and impostor schemes are draining older clients’ savings, report to Congress shows.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor