For years people have saved and invested for important life goals such as education, retirement or simply to growth their financial wealth. At the same time, many have been in a position to make charitable donations to organizations with which they share particular goals and values. Maybe it’s the environment, social justice or women’s issues – good causes abound.
We have always known that we can do good with our money by providing funding to important causes – and thereby we can direct our money to positive uses. Though, we’ve long been spoon-fed the idea by the financial services industry that we cannot invest our money in ways that are positive as well. Is it really a necessity to sink investment dollars into companies which pollute our environment, stoke global warming, and avoid diversity in their boardrooms and women in executive positions?
To talk with most financial advisors, you would think so. But 2014 may be the year in which investing fundamentally evolves. Women and Millennials are the disrupters. The opportunity to express one’s values – be they social, environmental or political – and to amplify one’s impact by expressing those values through investment dollars is becoming the vibrant new investment landscape.
Economists estimate that by 2030, women will control two-thirds of wealth in the United States. About half of affluent women report an interested in environmentally or socially responsible investments, as compared to just one- third of men.
At the same time Millennials are realizing their earning potential in many existing and emerging industries. Ninety percent of today’s MBAs are willing to exchange some financial benefits for a strong commitment to social good, according to Ourtime. org. And 79 percent of Millennials seek to work at a company that is socially responsible, according to CatchAFire.
Treading lightly on the earth and care for our fellow travelers are becoming meaningful, more widely-held views. Daily buying patterns have been favoring organics, fair-trade products, recycled materials and the like in recent years. People are logically extending their values into their economic behavior.
In the canyons of Wall Street, investing for impact has been eschewed as a niche market, not a pursuit for serious investors. But, there has been no conclusive or even suggestive research to show that investing in companies with positive practices can be expected to diminish returns. In fact, companies can avoid many potential risks by adhering to sound environmental practices and opening their doors to diversity in their ranks and boardrooms.
The next wave of investors is here.
This article first appeared in the February 2014 edition of Information Press, San Luis Obispo, CA