Learn more about market trends Millennials: Investing sustainably is key

Millennials: Investing sustainably is key

October 2018

Sustainability is a core value for the Millennials, a powerful generation given that they represent 50% of the world’s population. The Millennials are becoming more and more demanding with regard to sustainability and making a positive impact, both when it comes to consuming and investing. As consumers, they require companies to show how they make a positive contribution to society and the environment before buying a product. This focus is barely surprising as evidence of climate change is growing and pollution and health hazards are becoming increasingly apparent. The Millennials generation is also an important investor segment. After all, they are set to inherit more than USD 40 trillion of wealth in the coming decades.

The importance of investing sustainably

From an investment point of view, applying ESG criteria to stock selection has been shown to improve risk management without lowering returns. Further, companies whose ESG scores are improving tend to outperform those with static ESG scores. We believe there is a strong business incentive for companies to implement sustainable management practices with regard to ESG. Once these practices are deeply rooted in an organization’s culture and values, they can provide a competitive advantage in the long run. In turn, not focusing on sustainable factors could pose reputational, financial and litigation risks, which could make companies more vulnerable. Therefore, ESG not only improves risk-adjusted investment performance, but is also becoming a prerequisite for companies to operate.

Focus on companies that meet ESG standards

Source: Credit Suisse

Our approach to sustainability

In our Millennials’ Values Supertrend, we apply an ESG overlay to our entire stock selection. This means that we focus on companies with a top ESG score in the areas we believe are of relevance to this Supertrend. Furthermore, we have asked our sector specialists about the most important sustainability issues impacting their sectors in order to identify stocks that embrace sustainability and should benefit from their approach in this area. These stocks are then included in our “Sustainable business and investment” subtheme of the Millennials’ Values Supertrend unless they are already listed in another subtheme.

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