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Why Millennials and Gen Z Love Impact Investing

What if you were born after 1980? Greed is never a good thing in itself.

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August 30, 2021

4 min read

opinions expressed by entrepreneur Contributors are their own.

Millennials and Gen Zers are hit hard by their spending habits and are often accused of negatively impacting industries like diamonds, shopping malls and even the housing market. But investing is definitely one of those areas that is changing the game for the better. The reason is simple. Impact investing.

What is impact investing?

It is a strategy that prioritizes companies that have a positive impact on society. and You can get positive returns. Enthusiasts focus on companies that address issues related to sustainability, climate change, poverty, healthcare and education. The term was coined in 2007, but its prevalence has only increased in the decade and a half since then.

The Global Impact Investing Network has published the following Impact Investing Principles, which are at the heart of the concept.

Intent focuses on the aspiration to have a positive impact on some element of society by funding the cause of the company.

Investors still expect a return on their investment over time, which distinguishes impact investing from charitable giving. While many still believe that investing is purely for the sake of making a profit, and that all “doing good” efforts should be done through philanthropy, impact investing combines the two strengths.

Finally, impact measurement is very important to the overall concept. Rather than putting money behind the company and trusting that benefits to society will be realized, practitioners are intentional in following the trajectory of funds and monitoring progress over time.
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Popularity is With investors under 40?

According to one study, 52% of millennial investors view social responsibility in investing as an important selection criterion. In contrast, only 42% of Gen X investors and 30% of World War II investors felt the same way.

GIIN also found that the amount invested in impact investing increased tenfold between 2014 and 2017. The 2017 figure was estimated at $139.9 billion and is almost certainly higher today.

In 2020, BlackRock, the world’s largest asset manager, even jumped into impact investing with the BlackRock Global Impact Fund, meaning that this trend won’t last for a while.

Speaking of the mindset behind this movement: According to Statistic, there were over 72 million millennials in 2019. On the other hand, Baby Boomers have 69 million and Generation X have 65 million. The oldest people in their age group are currently the highest-income earners, and as baby boomers enter old age, it is expected that their spending power will increase as they inherit their income. In short, millennials and Gen Z investors already have a significant share of the market, which is expected to grow.

They learn to take an active part in a variety of social and political causes and to transfer the same passions to other opportunities. Impact investing is a natural extension of the movement for a cause that attracts young people every day. Combine this with the ability to save for a promising financial future, and it’s no wonder these young investors want their money to serve a dual purpose.
RELATED: 5 ways Gen Z and Millennials should consider when promoting their business

this next future

As a millennial impact investor, I look forward to watching mainstream strategies evolve over the next few decades. Rest assured, we will keep an eye on the progress of Profits by Purpose and will share updates as the movement evolves.
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