Investing in sustainable assets is a “no-brainer”, says Mr Michael Tan, 29.
“If I can have similar returns and hopefully do something good, why not?” says the young millennial investor, a product manager in the tech industry.
Climate change is extremely personal for Mr Tan, a digital native who is bracing himself for extreme weather and dire climate conditions.
“For young people like me, the threat is so real. We don't have the luxury of choosing to ignore the climate crisis,” he says. “I care about my future, so it’s only natural to care about climate action and the environment.”
Mr Tan is typical of the generational shift in attitudes towards ESG investing – investment products with environmental, social and governance (ESG) considerations.
A recent survey by asset management firm Amundi together with The Business Times found that while respondents across all ages are concerned about global warming, it is highest among the two youngest cohorts – Gen Z and young millennials. The two groups have the highest percentage of ESG investors.
The Business Times-Amundi ESG Investing Report polled 1,046 individuals in Singapore, of which 95 per cent are current investors.
“We embarked on this survey to uncover the attitudes and preferences of individual investors toward sustainable investing and how they differ across age groups,” says Mr Albert Tse, CEO, South Asia, Amundi. “Specifically, a deeper dive into the passion among younger investors in Singapore that drives their purpose beyond just profit.”
On average, Gen Z and young millennial investors – aged between 21 and 34 this year – place a higher percentage of their investments in ESG assets compared to older investors, says the survey.
“Younger investors are not just paying more attention to sustainable investing, but they are also doing more on that front,” says Ms Sylvia Chen, Amundi senior sustainable officer.
They want a fairer world
Beyond the environment, younger investors are keen to keep about social issues, such as global poverty, and inequality and discrimination.
Examples of social considerations in ESG include a company’s diversity and inclusion efforts, and its impact on local communities such as through job creation.
Ms Chen believes the growing interest in social issues among the young was partly driven by the pandemic. “Many young investors are aware that the pandemic has exacerbated existing inequalities, with its triple impact on education, income and health.”
In March this year, the Asian Development Bank estimated that the pandemic had pushed an additional 4.7 million people in South-east Asia into extreme poverty in 2021, compared to 2020. Extreme poverty is defined as living on less than US$1.90 (S$2.60) a day.
Mr Tan recalls reports of how less privileged students in Singapore struggled when schools pivoted to home-based learning in 2020, due to the lack of laptops and tablets. “That, to me, highlighted the existing inequalities that we sometimes don’t notice.”
As younger investors like him start to push for equality by shunning companies that don’t align with their values, the ESG landscape may change for the better.
“The relevance of reporting measurable social impact and taxonomy (classification system) will be increasingly important,” says Ms Chen.
Mr Samuel Rhee, chairman and chief investment officer of digital wealth advisor Endowus, agrees. “While the measurement of ESG factors has traditionally been a challenge, the quality and quantity of ESG data will continue to improve,” he says.
Endowus works with partners like Amundi to make its funds more accessible to retail investors.
How do young people in Singapore invest? What else do they care about? The survey takes a deeper dive into what drives young investors.
Young and engaged
Amundi designed a Sustainability Profiler Tool to help retail investors understand their preferences and willingness to integrate ESG into their portfolio. It was used in the Business Times-Amundi ESG Investing Report.
Young and energised
Here’s how ESG affects the investment decisions of young respondents.
Young and empowered
Young investors want to know more and do more. Beyond investments, how else does ESG affect their lives?
Close to 3 in 5
59 per cent of young millennials and 54 per cent of Gen Z stay updated on environmental and social topics, compared to the average of 51 per cent
…of Gen Z ranked poverty around the world as the second-most important cause, after global warming
…Of young millennials are concerned about inequality and discrimination
This is the last of a two-part series in partnership with Amundi