Young investors in the UK (18-24 years-old) are over three times as likely to invest in ESG, green and impact funds than older people (65+ years old), according to the inaugural Saltus Wealth Index.
The Saltus Wealth Index surveyed more than 1,000 people in the UK with investable assets over £250,000 to understand their thoughts and feelings about the UK economy, their own wealth and the issues that matters most to them personally.
When asked about their investment choices, almost two-thirds (64%) of respondents stated they invest in ESG, green or impact funds; this increased to eight in ten (80%) of those aged 18-24 but fell to less than a quarter of over 65s (24%).
Those aged 25-34 were also more likely to invest in ESG than the overall average, with three quarters (74%) saying that they do, dropping to two thirds (67%) of 35-44s and just under half (48%) of 55-64s.
When asked what they think is the biggest threat to their wealth, nearly one-in-four (24%) of under 25s said climate change but it was less of a worry for older people - just 11% of over 65s see climate change as the major concern. Overall, 67% of 18-24s say their money makes them feel ‘anxious', which is higher than the average figure of 61%.
However, the survey suggests that it may be wrong to think of young people as a unitary group with a single attitude to ethical investing.
While younger people are much more likely to invest in ESG than any other age group, those that don't are the most sceptical about its legitimacy or impact.
When we asked respondents that don't invest in ESG for their reasons, returns did not emerge as a major issue for under 25s - just 11% cited this reason compared to almost a third (31%) overall - but they were concerned about the authenticity of green investments.
Close to half (44%) of the sceptical under 25s said they don't think investing in ESG makes a difference, with the same number saying they don't think green funds are ‘truly environmentally friendly'.
But for older people the reluctance to invest ethically is primarily returns related. Overall, a third of people aged over 55 who don't invest in ESG said it is because they don't generate sufficient returns, whilst just 13% of over 65s don't think they are truly environmentally friendly.
Michael Stimpson, Partner at Saltus, said: "Our research shows that younger investors are considerably more likely to invest in green funds, but interestingly, amongst all investors who don't, it is the younger respondents that are the most sceptical about the validity of green funds.
"This suggests that the vast majority of younger investors that believe in green are investing in it.
"In comparison, older investors are less likely to invest in green, with returns being their main reason for not doing so. Perhaps this is because they are nearer to retirement and more concerned about generating a good income now, than investing for the longer term.
"The research also shows general feelings of unease across the board, with 61% of respondents saying their money makes them anxious. There are a number of factors at play here, including lingering post-pandemic uncertainty, and inflation as well as climate change, which highlights more than ever the importance of having a robust financial plan in place, for both financial and personal wellbeing."
In further industry reaction, Rennie Hoare, partner and head of philanthropy at C. Hoare & Co, said: "Being proactive with clients now is critical; it is happening but not at the pace we need," he said. "Covid has driven an awareness of how interconnected our world is, and more of a willingness to invest for good. But even forward-thinking impact investors are facing slow progress. We need to re-start the progress that had been made but was diminished through the pandemic."
