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Why ESG Initiatives Are Vital in Tapping Young Investors

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With climate-minded young investors set to inherit trillions, your investor relations must shine a light on ESG initiates to attract millennial shareholders.

A recent study shows millennials will receive $68 trillion from their Baby Boomer parents by 2030. They’re on track to inherit five times as much wealth as they had in 2019 in the world’s biggest intergenerational transfer of wealth in history. 

The biggest question of the hour is how will they invest it?

Experts forecast millennials will pour funds into ESG investments, making your ESG initiatives top of mind for your investor relations strategy.

According to the ESG consultants at Q4, the specialists behind  Q4 ESG Website Solutions, you need to place your ESG reporting front and center on your IR site. Here’s why:

Young Investors Want Their Money to Matter

ESG funds have already made an enormous splash on the markets. In 2019–2020, they increased by 29% to reach $1.7 trillion, and they didn’t show signs of stopping, even when the pandemic struck. According to S&P Global, ESG funds rose between 27.3% and 55% from 2020–2021, outperforming the S&P 500.

Millennials and Gen Z investors are the driving force behind ESG funds’ meteoric rise on the market. They’re passionate about the climate and civil rights issues, and they want to invest in corporations that reflect their values.

In 2018, investment research firm MSCI Inc. released a study on millennial investment habits. Their findings show a huge demand for responsible investing from this generation.

  • 87% of high-net-worth millennials consider a company’s ESG track record when making investment decisions.
  • 89% of millennials expect their financial professional to research a company’s ESG performance before recommending an investment opportunity.
  • 57% of millennial investors have intentionally pulled money out of a company because of the impact that a company’s products or services have on people’s health and well-being.

With the oldest millennials on course to inherit their parents’ wealth in less than 10 years, this generation will be making these eco-based decisions with even greater funds at their disposal.

Investor Relations Must Highlight ESG Reporting Online

Studies show a company’s IR site is the most trusted and used source of information to investors. They’ll visit a company’s site to learn about its history, goals, and value proposition before checking social media or major economic publications like The Financial Times or The Wall Street Journal.

And with millennials’ eco-minded approach to investing, they’re scrolling IR sites for key sustainable and socially responsible data.

A successful ESG website will help your company leverage your ESG data to attract these younger investors. This is one of the ESG investing principles that all investors must understand.

Transparency is fundamental to attracting millennials and older Gen Z, according to the ESG consultants at Q4. Your reporting should clearly outline your goals in each category of ESG, how you plan on achieving them, and what you’ve achieved.

Although no regulatory body has standardized how you share this data yet, the SEC plans to reveal its official framework this year. Until then, share concrete evidence of how you’re making a positive difference in the world. Clear and impactful data will speak for itself and help you attract younger investors. You need to be as transparent as possible to appeal to them, since they are astute about recognizing companies that greenwash their practices.

Follow the Right ESG Principles as a Company Looking to Attract Young Investors

There are a lot of factors that you have to take into consideration as a sustainable investor. The practices listed in this post will help you make the most out of them. You will be able to invest in eco-friendly securities that are likely to have strong, long-term returns.

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