Institutional investors and registered investment advisors (RIAs) often get much of the credit, and rightfully so, for spurring adoption of environmental, social, and governance (ESG) strategies.
However, plenty of retail investors are embracing ESG exchange traded funds, including the SPDR S&P ESG ETF (EFIV). Support for those ETFs is also found among younger investors, including Millennials and Generation Z.
Deloitte Global’s 2022 Gen Z and Millennial Survey confirms the extent to which Millennials and Gen Z are focusing on issues such as climate change and sustainability. These demographics are highly committed to environmental sustainability, and that could spur future long-term growth for ETFs such as EFIV.
“Gen Zs and millennials are doing their part—nine in 10 make an effort to protect the environment. In the near-term they are focused on small everyday actions like buying second-hand clothes or sourcing locally or organically produced food. In the longer term they see themselves increasing their civic engagement and bringing sustainability into their large purchases,” according to the Deloitte Survey.
The survey also indicates that while many members of these marquee investing demographics currently lack the means to do so, they plan to make future purchases to reflect commitments to sustainability, including solar panels and electric vehicles. Deloitte notes that half of respondents plan to make such purchases in the future.
That could prove beneficial to ETFs such as the SPDR Kensho Clean Power ETF (CNRG). CNRG, which tracks the S&P Kensho Clean Power Index, features exposure to solar companies and offers investors a broad reach into the clean energy investment thesis.
Both CNRG and EFIV are relevant in the Gen Z/Milliennial conversation for other reasons, including the point that these groups are active when it comes to addressing climate change and they expect the same of corporations and governments.
“They believe businesses and governments need to do more to fight climate change. Only 15% of Gen Zs and 14% of millennials strongly agree that businesses are taking substantive actions, marginally more than the 11% of Gen Zs and 13% of millennials who think their governments are highly committed to addressing the climate emergency,” according to Deloitte.
Likewise, people in these demographics want to see their employers, plenty of which reside in EFIV, take leadership roles in addressing climate change.
For more news, information, and strategy, visit the ESG Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.