Women & Millennials: The influential drive behind SRI

By April 22, 2016Ethical, Investing

Women, Millennials, and those that prioritise the sustainability of the planet are significant people to consider when strategies are adopted to provide guidance on personal investment.

Women globally control over $20 trillion in annual consumer spending. The biggest generation in U.S history, millennials represent a significant part of the future of investing. These fast growing demographics are set to drive growth into the socially responsible investment universe.

Sustainability – Increasingly a Prime Focus

The issue of sustainability and the welfare of the planet are increasingly influencing our decisions. Concerns for the environment has an impact on all aspects of our lives – the food we buy, how we decide to travel to work, which clothes we purchase and from which store we buy them, the fuel we use, and the materials we use to build our homes. News reports, awards and certifications, and business practices, all focus on issues that affect the wellbeing of our planet and point out steps we can take to reduce our own personal carbon footprint. More than just a passing trend, these issues will become even more crucial. Consumers will make more demands for ethical choices, and more expectations will exist with regard to sustainability worldwide.

Women and Their Investment Choices

In 2009, women globally controlled around $20 trillion in annual consumer spending so it would be foolish or unwise to underestimate the female consumer. ‘The Female Economy was identified by the Boston Consulting Group; pointed out that women represent a growth market bigger than China and India combined.

A study by Calvert Investments, reported nearly all the women questioned pinpointed environmental responsibility and ‘helping others’ as being important to them, 60% of those asked said they took a company’s corporate behaviour and how it aligns with their personal values into account when making a purchasing decision. However, 70% of women had not heard of responsible or sustainable investing, while only 4% knew how they could invest their money aligning with their values. 18% said they would be happy to invest in mutual funds that support those values, and even more (54%) would choose companies that invest in ethical business practices and demonstrate corporate responsibility.

It is estimated that 50% of America’s $22 trillion of private wealth will be in the hands of women by 2020 and women look set to occupy an even more prominent position in the economy than they do now.

With campaigns such as ANZs #equalfuture aimed at the empowerment of girls and women in securing their financial future and strong idols such as Sheryl Sandberg, Opera Winfrey, and Australia’s Gail Kelly and Quentin Bryce, there are now multiple pathways that reach women more effectively.

The Calvert Women’s Principles focus on empowering, advancing, and investing in women across the world. The Principles were designed in 2004 to provide companies with goals for achieving gender equality, including representing women in management roles and above. The seven principles outline how a company should aspire to impact women, how they can measure their progress with regard to how their products affect women, and how they impact women down the global supply chain. Through partners such as the UN Global Compact, more than 800 companies have committed to work towards adopting them.

Millennials in 2016  

The biggest generation in U.S history, millennials represents a significant market. Those who were born between 1980 and 2000, are about to move into their prime spending years in 2016 as they establish careers and look to invest their cash to achieve the best returns. Many among this generation have grown up surrounded by the importance of sustainable practices in everything they do and see, from recycling to energy saving and for many it has been a large part of their upbringing and education. Millennial investors are far more likely than other generations to be familiar with, and invest in, responsible or sustainable investing. They are, in fact, more than twice as likely as other generations to choose investment strategies that take into account both financial return and social good.

Dubbed the “Conscious Consumer”, Millennials are not only aware of what they are buying but are also more likely to purchase products if they are locally sourced, or the proceeds go to charity. What is better than giving? Giving and receiving. Born into an era of instant gratification Philanthro-ME raise awareness and donates to worthy causes which is why causes such as the ALS Ice Bucket Challenge was so successful in raising funds for Lou Gehrig’s Disease. This combination of charity, social perception, and individualisation is powerful at just the right balance.

Responsible and sustainable investment choices in 2016

Investors no longer have to forgo financial returns in order to invest with their values. Companies are investing in efforts to manage their impact on society and the environment for both moral and economic reasons. Global corporations are seen as having contributed to the world’s environmental and sustainability problems and they are therefore expected to contribute to finding solutions. Environmental and social related investments can however, protect or enhance shareholder value, and this, therefore, translates to real benefits for businesses and investors.

More and more investors are choosing companies that show their commitment to environmental issues, with women and millennials among the most passionate. The growth of Social Responsible Investing will be led by the influence for these investors. It is crucial to understand how to invest the right way in accordance with your personal values you hold dear, as well as taking your financial needs and future plans into account.


Disclaimer:

This Communication has been prepared by Vertical Capital Markets Pty Ltd (ABN 11 147 186 114 AFS Licence No. 418418) trading as VFS Group (VFS Group).

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