Young people care – for the planet as much as their pockets.

Whether it’s Gen Z or young millennials, the two cohorts – defined as those aged between 21 and 34 this year – have a reputation for being socially and environmentally aware.

They’re willing to use their money to shape their ideal world. A recent survey by asset management firm Amundi together with the Business Times found that 82 per cent of Gen Z and close to two-thirds of young millennial investors have ESG investments – the highest across all age groups.

These investment products include environmental, social and governance (ESG) considerations, on top of financial returns.

But should the ideal of shaping a more sustainable world rest solely on their young shoulders?

No, suggests data from the Business Times-Amundi ESG Investing Report, which polled 1,046 individuals in Singapore. Of this, 95 per cent are current investors – and over half of them have ESG investments.

Across all ages, the main motivation for sustainable investments is to build a positive future.

“We believe this survey provides valuable insights into the current views of Singapore investors, and hope it can inform and inspire one or two more steps in the right direction of change,” says Mr Albert Tse, CEO, South Asia, Amundi.

From going green to win-win

The appetite for sustainable investments has been growing rapidly in Asia, says Mr Tse, partly due to the rising awareness of ESG from investor education, government initiatives and the Covid-19 pandemic.

There’s still room for growth. Mr Samuel Rhee, chairman and chief investment officer of digital wealth advisor Endowus, notes that ESG investing is still nascent in the region compared to other markets.

“It is heartening to see that contributing towards a sustainable future through investing is fast becoming a priority for many investors here,” he says.

Amundi and Endowus worked together to launch four low-cost index funds in Singapore this month.

Money held in ESG integrated and sustainability-related funds in Asia-Pacific stands at US$126.1 billion (S$174.9 billion) this year, says research and consulting firm Cerulli Associates, representing an increase of 66.3 per cent from 2021. It excludes negative or exclusionary screening products.

Data from the Business Times-Amundi ESG Investing Report suggests that the conversation around ESG investing has to focus on returns and impact. About 70 per cent of respondents view financial investments mainly as a way to grow their savings.

Only 8 per cent perceive it as a leverage for ongoing environmental and social changes, says the report.

“This points to a clear message of the importance of returns for the Singapore investor,” says Ms Sylvia Chen, Amundi senior sustainable officer.

But with ESG, there is no need for a trade-off between purpose and profit, she adds. “Increasingly, ESG has a growing impact on returns.”

Since 2014, research by Amundi has shown that ESG integration is a key driver of alpha – the ability of an investment to outperform a relevant benchmark index.

“The importance of taking into account ESG factors in investment decisions has become more acute,” adds Ms Chen, “partly propelled by the pandemic.”

How has Covid-19 affected the way retail investors view sustainable investments? Why do they invest in it? See below for more on the survey.

How they invest

Overwhelmingly (95 per cent), Singapore residents polled have at least one or more investments. The remaining 5 per cent intend to do so in the next 12 months.

More than half (56 per cent) of retail investors surveyed have ESG investments.

Why they invest

What motivates people to put their money into sustainable investments:

• 69%
  of all respondents chose “building a positive future” as the top driver for sustainable investments
   
• 3 in 5 
  respondents ranked “driving sustainable change” as one of their top motivations for sustainable investing
   
• 62% 
  …of Gen X/Baby Boomers (aged 45 and above) believe it is important to support the transition to a low-carbon world, compared to 51 per cent for Gen Z and young millennials (aged 25 to 34), and 55 per cent for older millennials (aged 35 to 44)

The pandemic impact

How the pandemic has affected people’s attitudes and sentiments towards sustainable investments:

• 67%
  …of all respondents agree that they are more aware of sustainable investments
   
• 69%
  …of all respondents agree that they are more interested in sustainable investing
   
• Over half
  65 per cent of all respondents agree that the pandemic influenced them to invest more sustainably

Sustainable investing has become more of a priority for...

• 79% of Gen Z
• 68% of young millennials
• 57% of older millennials
• 56% of Gen X/Baby Boomers

This is the first of a two-part series in partnership with Amundi