Monday, June 5

What drives millennial women towards sustainable investing

Over the years, investing has gone beyond drawing high returns. A decade ago, investors used to invest in companies that provided maximum output but this perspective is changing now. The concept of environmental, social and governance (ESG) investing that originated in the 1960s is now gaining tremendous popularity in India. Increasing number of investors now want to invest in companies that are ESG compliant. The interest in ESG has skyrocketed. A rapid shift from a growth-driven approach to a value-driven approach is evident.

According to a report by Morningstar in 2019, an estimated 72 per cent of millennials in the United States stated that they were interested in sustainable investing. A similar trend is being observed in India. Until January 2020, there were only two mutual fund schemes investing in ESG compliant companies. Now the count has increased to 12, a whopping 600% increase. AUM of ESG mutual funds schemes have grown 3 times in the last two years.

In the current scenario, women are taking charge of their finances. From making financial decisions to investing we have come a long way. There is an upsurge in millennial women investors who are keen to invest in ESG compliant companies. In a report by Morgan Stanley, it was stated that nearly 76 per cent of women are interested in sustainable investing.

On the occasion of Earth Day, cited below reasons that drive millennial women towards sustainable investing:

Driven by a zeal to ‘do what’s right’ reflects on investment style

Millennial women are independent and they have a strong zeal to achieve their goals. They are the boss of their life. Doing the right thing and always taking a stand for the right objective is a motivator for millennial women. They aim to change the way things used to be by choosing sustainable investing and stepping towards the right business outlook. Investing in a value-driven organization enables them to do business while upholding its principles.

Environmental & Social Concerns

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As the world struggles with multiple crises – climate and social unrest, we are seeing tremendous growth in sustainable investing across the globe. The millennial women are more conscious about sustainability and saving the planet earth by not just making lifestyle changes but also changing the way they are investing their money. This is where ESG investing comes into play. They have realized that they can invest in a way that not just benefits them but also the environment. Everyone wants to leave a positive mark on society.

Prioritizing ESG for Business

Over the last few years, we’ve witnessed an increase in the investments being channelled into ESG-compliant funds. This is just the beginning and going forward, ESG will be a way of life because you are earning profits ethically by being socially, and environmentally aware and by doing the right thing through sustainable investing. Millennials and especially women investors will be the drivers of the growth in the ESG segment. Unlike other investors, millennial women do not focus entirely on returns instead they look at multiple factors before investing including projection of long-term benefits, values, societal impact, etc. Through ESG women can align their goals toward investing by a long-term approach.

Responsibility towards the Society

Millennials and especially women are well-aware of the societal issues and the problems the community is facing. Through ESG they want to give back to society and create a considerable impact on society. Investing in a company that practices certain steps for environmental conservation would help in the comprehensive growth of society. Millennials are at the forefront of utilizing sustainable investing to drive positive transformation.

Contributing to the rising issues associated with climate change

Climate change is a major concern. With the rise in climate issues and concerns associated with global warming, millennial women want to contribute their bit through ESG. Sustainability has become a mainstream conversational topic and it has brought the focus toward investing sustainably. By investing in ESG companies women believe that they are able to bring a positive change and save the environment while benefitting from it.

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In the coming years, the number of ESG companies would certainly increase as people would become aware of sustainable investing and how it can benefit them to meet their long-term business goals. We will see more and more companies following ESG standards along with focusing on the growth of the company. ESG is the next big thing and it would change the perspective of millions of investors while spreading awareness about environmental concerns.

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