Impact Investing A new generation. A more sustainable approach to wealth.
Millennials have started to leave their mark on the world through their interests, innovations, and entrepreneurial power. Harvesting returns through sustainable investments with ESG (Environmental, Social and Governance) factors as a foundation, is one significant example. As change makers, they have already shown that being entrepreneurial is more than a business term: it’s a mindset to take opportunities and risks and set progress in motion.
At Credit Suisse we value and support their devotion to progress. As one of the largest inheriting generations in history and with their life path at an early stage, we are only just beginning to see the potential impact of the next generation.
How is the new generation different?
The new generation is composed of global citizens. International exchange is now possible not only by travel but also via our digitally interconnected culture. They are increasingly concerned about climate change and actively support ESG ventures with causes related to the environment, sustainability, and social enterprise.
They recognize their power as responsible consumers and know that the capital they will control can be the means for positive change: An important capacity given that this generation is set to inherit a large sum of wealth in the coming decades. A recent poll found that 80%1 of Millennial investors either own or show an interest in impact investments and 64% of the Next Generation surveyed for the recent Credit Suisse report “Creating a World with the Next Generation” expressed an interest in sustainable and in impact investing.
What does this mean for how wealth and businesses are managed going forward?
The new generation will increasingly want to manage their wealth by investing in companies and funds that meet ESG criteria. Impact investing, where investors look for both financial return and positive impact is also likely to be popular. Wealthy families are already changing the way they manage their investments by, for example:
- Ensuring that the family investments reflect its values by empowering entrepreneurial new technologies to promote energy efficiency in local and regional areas
- Aligning the family agricultural business with sustainable investment opportunities in water, forestry, and infrastructure
The new generation set to inherit family businesses are likely to challenge business practices and supply chains in order to make them more sustainable. This is not only in line with their broader value set but is also a response to increasing consumer demand for products that have been produced sustainably.
Tangible results are already seen thanks to the dedicated efforts of some younger entrepreneurs. Some examples include:
- Promoting social equality in local communities by providing scholarships and other forms of access to education for family business employees and their children
- Encouraging women professionally and actively attempting to decrease the gender gap