A recent nationwide survey of 2,470 individual investors conducted jointly by the Stanford Graduate School of Business, the Hoover Institute Working Group on Corporate Governance at Stanford University, and Rock Center for Corporate Governance at Stanford University revealed stark generational differences toward ESG investing between investors aged 41 and younger (“younger investors”) and those 58 years old and older (“older investors”).
Environmental issues
- 70% of younger investors are very concerned about environmental issues compared to 35% of older investors.
- Nearly 80% of younger investors, compared to 42% of older investors, believe it is very or extremely important that investment companies use their size and voting power to influence portfolio company environmental practices.
- 85% of younger investors say they are willing to compromise the value of their investment in support of their investment manager’s environmental advocacy/activism, compared to 35% of older investors.
Social issues
- 65% of younger investors are very concerned about social issues compared to 30% of older investors.
- 82% of younger investors, compared to 35% of older investors, believe it is very or extremely important that investment companies use their size and voting power to influence portfolio company social practices.
- 80% of younger investors are willing to compromise the value of their investment in support of their investment manager’s social advocacy/activism, compared to 29% of older investors.
- 78% of younger investors are invested in at least one socially responsible fund compared to 19% of older investors.
Governance issues
- 64% of younger investors are very concerned about governance issues compared to 28% of older investors.
- More than 80% of younger investors, compared to 34% of older investors, believe it is very or extremely important that investment companies use their size and voting power to influence portfolio company governance practices.
- 80% of younger investors are willing to compromise the value of their investment in support of their investment manager’s advocacy/activism on governance practices, compared to 26% of older investors.
ESG investing generally
- Wealthier younger investors are much more supportive of ESG initiatives than younger investors with lower investment balances, whereas older investors are generally not supportive of ESG initiatives regardless of their wealth.
- Overall, most younger investors say they are willing to compromise 6% - 15% of their investment return for improved portfolio company environmental, social, and governance practices, whereas most older investors are not. The percentage of reduced return younger investors say they are willing to assume depends on the specific ESG practice queried.
- Most investors (all age groups) believe mutual fund managers should take the personal views of their individual investors into account when voting on environmental or social issues at the annual shareholder meeting.
- Consistent with the foregoing data, most younger investors agree with large institutional investor policies to vote against directors based on companies’ climate change and board diversity performance, whereas most older investors disagree.
Interestingly, the vast majority of younger investors self-identify as extremely or very knowledgeable about the stock market and have great expectations for their short- and longer-term return on investment (one year and 10 years, respectively). In contrast, less than 20% of older investors self-identify as extremely or very knowledgeable about the stock market and most expect much lower returns over the short- and longer-term.
The report also includes survey data on investors between those two age groups (Gen X).
See “Young investors willing to take ‘very large’ losses for ESG, Stanford survey finds” (RI); “How Investors Feel About ESG Initiatives” (WSJ); and additional resources on our Individual (Retail) Investors page.
This post first appeared in the weekly Society Alert!