Sustainability investing is often seen as something only pursued by millennials who are jumping on a bandwagon with their trendy friends. It is true that this age group seems to have the biggest interest in SI, but it is certainly not a hype. In fact, interest in sustainability is spread across the generations, and its roots go back centuries.
Stereotypes about people who are seeking a more sustainable world tend to focus on those born since the mid-1980s, since research does show that millennials are more interested in the issue. They are more likely for example to buy organic food, demand Fairtrade coffee and be more concerned about human rights than their parents or grandparents.1
They also grew up in the internet age and have enjoyed greater access to information exposing unsustainable activities, becoming more politicized by it. Research in the US showed that millennials were the “most progressive generation in 50 years” and were making the country more liberal.2
But when it comes to investing, demand for sustainability is fairly evenly spread across all age groups, according to a 2017 questionnaire by Robeco into the tastes of its Dutch retail investors. Some 70% of people aged over 50 stated a clear interest in sustainability compared to 66% of 34 to 50-year-olds and 67% of 18 to 34-year-olds. While not an exhaustive scientific study, it did reveal that sustainability was as popular among middle-aged and older people than it was among the millennials.
Those who went on to invest in sustainable funds were 28% of the over-50s, 29% of the 34 to 50-year-olds and 26% of the 18 to 34-year-olds – again showing that interest is evenly spread across age brackets, with the middle-aged still slightly in the lead. Meanwhile, the average part of a portfolio invested sustainably was 29% for the over-50s, 30% for 34 to 50-year-olds and 33% for 18 to 34-year-olds – so here, the millennials are slightly in the lead, though not significantly, Robeco’s in-house research showed.
Sustainability is by no means a modern ‘fad’. Its origins go back to the 18th century church, when Quakers launched the first exclusions by refusing to invest in anything involved with the slave trade. In more recent times it picked up speed with the first equal rights legislation in the 1960s and the environmental campaigns of the 1970s. One of the first major uses of exclusions was seen in the 1970s when companies refused to invest in South Africa due to its apartheid regime.
It reached the global stage in 1987 when the United Nations World Commission on Environment and Development (the Brundtland Commission) released its report, ‘Our Common Future’, tackling uncontrolled use of natural resources, led at the time by extensive deforestation. The document is most notable for coining the term ‘sustainable development’ that particularly aimed to encourage emerging markets to avoid destroying the environment as they pursued economic growth. In defining what its new phrase meant, Commission chair Gro Harlem Brundtland wrote: “Humanity has the ability to make development sustainable to ensure that it meets the needs of the present without compromising the ability of future generations to meet their own needs.” 3
Another famous phrase, known as the ‘triple bottom line’, was coined not by a millennial, but a middle-aged British businessman in 1995. John Elkington said any enterprise needed to consider the three Ps of ‘People, Planet, Profit’ (and not just the final word) as each being equally important for the long-term success of society. This concept was adapted to become environmental, social and governance factors, or ESG, which now forms the bedrock of most sustainability investing processes.4
The ‘sustainability investing’ phrase and theme entered common usage in the following decade, when it first started to be taken seriously by investors. It went through various incarnations including ‘ethical investing’, ‘responsible investing’ and latterly ‘socially responsible investing or SRI’, before ‘sustainability investing’ was widely agreed to be the most appropriate moniker to capture the different investment strategies that take into account ESG factors.
As for a ‘hype’, the true globalization of sustainability achieved perhaps its finest hour with the United Nations Climate Change Conference, known as COP21, in Paris in 2015. It produced the Paris Agreement, which challenged the world to limit global warming to below two degrees Celsius compared to pre-industrial levels. It was ratified by 174 countries on 22 April 2016 – now designated by the UN as ‘Earth Day’.
So, while sustainability investing has been a fairly niche concept in the past, we are now clearly at an inflection point, and there is no way back.
1 Produce Retailer, ‘Younger consumers buy more organics’, 2017
2 The Millennial Pendulum: A new generation of voters and the prospects for a political realignment, 2009.
3 Report of the World Commission on Environment and Development: ‘Our Common Future’
4 John Elkington, ‘Enter the triple bottom line’, 2004
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