“Impact investing”—financial investments designed to generate a measurable, positive impact on society, while also providing potential returns—is growing in popularity, according to new research from global asset manager American Century Investments.
The “appeal” of impact investing reached 49 percent among 2018 survey participants, compared to 38 percent in 2016. At 56 percent, Millennials find impact investing most appealing, followed by Gen Xers and Baby Boomers at 52 percent and 44 percent, respectively—and public companies need to keep these reputational concerns and these increasingly influential younger audiences top of mind.
“This research shows that interest in impact investing continues to grow across all age groups but particularly among the next generation of investors,” said Guillaume Mascotto, vice president, head of ESG (environment, social and governance) and investment stewardship at American Century Investments, in a news release. “As an asset manager, we’re committed to offering solutions for those seeking to have a positive impact on society by investing in companies whose business activities are focused on addressing global issues, notably the United Nations’ Sustainable Development Goals (SDGs).”
The SDGs consist of 17 goals to address social and economic development issues including poverty, hunger, health, education, global warming, gender equality, water, sanitation, energy, urbanization, environment and social justice.
When asked about the importance of certain factors while making investment decisions, “return on the investment” was considered “somewhat or very important” by 86 percent of 2018 respondents, up from 81 percent in 2016
“Fees, risks and length of time money will be invested” also ranked high as considerations in both studies. “Impact on society,” was selected by 54 percent of respondents in 2018, up from 42 percent in 2016. The response was popular among Millennials (60 percent) and women (57 percent).
“As one might expect, factors like investment returns and fees remain top considerations when determining how to invest money,” Mascotto said. “The significant increase in the percent of investors factoring societal impact into the decision-making process, particularly among younger investors, confirms our view that investors do not need to choose between impact and returns.”
Nearly half (45 percent) of the 2018 survey respondents said they intentionally choose to do business with companies whose “values align” with their own
This finding was consistent across all gender and age groups, with Millennials ranking it highest at 47 percent.
When presented with a broad list of causes that align with their personal values, a third (33 percent) selected “healthcare/disease prevention and cures” as a priority when making an impact investment. This cause ranked the highest followed by “environment/sustainability, improved education, mitigating poverty and alignment with religious principles.” Other mentions garnering single-digit responses included “animal rights” and “veterans’ issues.”
“Investor interest in making an impact investment tied to healthcare/disease prevention aligns well, not only with the SDG goal tied to good health and well-being, but also with American Century’s unique ownership model, which we view as the ultimate example of investing with impact,” Mascotto explained. “As we strive to deliver superior investment results for clients and they continue to entrust us with their assets, our success and profitability will continue to generate positive societal impact around basic medical research funding that is aimed at finding cures for life-threatening diseases like cancer.”
The survey was conducted among a sample of 1,005 adults, comprising 503 men and 502 women 18 years of age and older from July 9-11, 2018. The study was fielded using Engine’s twice-weekly Online CARAVAN Omnibus Survey. The results from the survey were weighted by age, sex, geographic region, race and education to ensure reliable and accurate representation of the adult U.S. population.