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Why Millennials and Generation Z Interest in ESG Investing Is Declining

A study by Stanford University and the Hoover Institution published in December 2023 also shows that ESG investments are no longer as popular with investors. The survey was conducted by LUCID Theorem in fall 2023 among 993 US private investors. Participants’ assets in retirement and personal savings accounts ranged from less than $10,000 to more than $500,000.




In recent years, the generally increased awareness of sustainability has also reached the stock market.

Investing in the trend is possible either directly by purchasing shares in companies that place great value on sustainable business operations, or through ESG funds that pool several such companies.

In recent months, however, interest in the supposedly sustainable investment options has decreased, partly because many companies that fall under the ESG principles have been accused of greenwashing. The term describes the practice of presenting yourself as more environmentally friendly than you actually are, for example through communication measures or marketing tools.

Read more about the importance of ESG investing and why Millenials and Generation Z are loosing interest, with the Born2Invest mobile app. Our companion app keeps its readers up to date with the most important business news of the day so they can stay informed.

Stanford study examines ESG interest across different generations

A study by Stanford University and the Hoover Institution published in December 2023 also shows that ESG investments are no longer as popular with investors. The survey was conducted by LUCID Theorem in fall 2023 among 993 US private investors. Participants’ assets in retirement and personal savings accounts ranged from less than $10,000 to more than $500,000.

On average, the test subjects had assets of $150,000. Most of the investments mentioned were held by asset managers Fidelity, Vanguard, American Funds, BlackRock, Invesco and State Street . 45 percent of the participants surveyed were between 18 and 41 years old at the time of the survey and therefore belonged to the Millennials and Generation Z generations. 28 percent were Generation Z.

Sharp decline in ESG interest among Millennials and Generation Z

The researchers found that concern about ESG issues decreased year-over-year among Millennials and Generation Z members surveyed. This applied to environmental aspects as well as to social and leadership issues. 

In 2023, only 49 percent of participants said that environmental concerns such as carbon emissions targets and the procurement of renewable energy were important to them, compared to 70 percent in the previous year. 53 percent said they are concerned about social issues such as workplace diversity, income inequality and workplace conditions. Previously it was 65 percent. And after 64 percent in 2022, only 47 percent are now concerned with corporate management.

Decline also hardly changed among Generation X – Baby Boomers

ESG issues were also no longer as much of a focus for Generation And when it came to aspects of company management, participation also fell from 53 percent to 30 percent.

Significantly less change was observed among the boomers and the silent generation, although interest in this age group was comparatively low last year. After 35 percent in the previous year, 34 percent of the baby boomers surveyed were concerned about the environment in 2023. 

Social aspects, on the other hand, rose slightly in favor of the generation, from 30 percent to 33 percent. However, only 26 percent were concerned with leadership issues, down from 28 percent in 2022.

“Mood changed dramatically”

“Just a year ago, young investors told us overwhelmingly that they were deeply concerned about environmental and social issues and that they wanted the fund managers investing their savings to use their size and voting power to advocate for change, “even if it meant a loss of personal wealth,” said Professor David F. Larcker from the Stanford Graduate School of Business and the Hoover Institution Working Group on Corporate Governance, commenting on the study results in a press release. 

“This year has seen a dramatic shift in sentiment, with young and middle-aged investors consistently expressing lower support for ESG issues, by double-digit percentages.”

No more losses due to ESG aspects

According to this, young investors are increasingly less willing to miss out on potential gains through ideals such as environmental concerns, social aspects and sustainable corporate governance, as Professor Amit Seru also added:

“Young investors tell us that they are much less willing to commit personal money to see progress on issues such as climate change, sustainability, working conditions and workplace diversity. As their confidence has declined, investors are becoming more cautious about risking their personal wealth to support their stakeholders’ causes.”

“Test” for the ESG market

In addition, Seru also sees the high inflation rates in 2023 as partly responsible for the collapse in demand for ESG investments, as the professor explained to the “Bloomberg” news agency. “When interest rates rise, inflation skyrockets and people have to deal with reality,” said the Stanford researcher. 

Companies that produce clean energy had hoped for stronger stock market performance from the US government’s Inflation Reduction Act, which also includes the switch to alternatives to fossil fuels. However, shares were also affected by higher borrowing costs. According to Bloomberg, losses on the stock market here amounted to about $30 billion in the second half of 2023. “Last year was something of a test,” summed up Seru.


(Featured image by Helene Lopes via Unsplash)

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Jeremy Whannell loves writing about the great outdoors, business ventures and tech giants, cryptocurrencies, marijuana stocks, and other investment topics. His proficiency in internet culture rivals his obsession with artificial intelligence and gaming developments. A biker and nature enthusiast, he prefers working and writing out in the wild over an afternoon in a coffee shop.