Barclays has researched more than 2,000 UK investors on their attitudes to impact investing and found that more must be done to help remove the misconception around impact investing among older generations, with a danger that baby-boomers feel unengaged with investments, Barclays has warned.
Impact investing, investing to intentionally generate financial returns whilst making a positive contribution to our world, is particularly popular with millennials, who remain the driving force behind this rapidly growing movement.
Two out of five investors (43 per cent) aged under 40 report having made an impact investment during their lifetimes, Barclays research finds, which is up from 30 per cent when the bank first asked the question in 2015.
This compares to only 9 per cent of those aged 50-59, and 3 per cent of those aged over 60.
Nonetheless, investors are recognising that the world around us is changing and impact investing is a means of contributing to solutions to our most pressing global challenges, with 15 per cent of all the investors surveyed having made an impact investment, up from 9 per cent in 2015.
While younger age groups display greater interest in impact investing, older investors, who hold greater wealth today, represent a critical opportunity for the sector, according to Barclays.
Damian Payiatakis, Head of Impact Investing at Barclays, says: “Younger generations are more naturally comfortable combining financial and societal ambitions when investing. “However, it’s the older generation who have more investible wealth today and whose choices will be significant in shaping the investment market and the world their children and grandchildren live in.
“They also have been investing over a longer period, so we’re working with existing portfolios that need to be transitioned with their preferences and the new impact investments becoming available – a process that isn’t always simple.
“Ultimately though, if impact investing is to truly enter the mainstream and become integrated into regular investment processes, the industry will need to build an approach that captures the interest of, and caters to, the whole spectrum of investors.”
Dr Peter Brooks, Head of Behavioural Finance at Barclays, says: “Millennials are not only interested in impact – they’re the most likely to take action to invest for impact. Therefore, looking ahead to attract and retain next generation wealth means developing products and services catered to their needs.”
The amount millennials are willing to invest in impact investments is currently much higher than older peers. The study found that for those aged under 40, prior impact investments made up 17 per cent of reported investible assets, falling to 9 per cent for those a decade older, and to 6 per cent for those over 60.
The research finds younger investors would allocate the highest proportions of their portfolios: those aged under 30 would allocate three times as much of their portfolio to impact investments as those who are 60 and above.
Dr Brooks says: “Our research shows different age groups require different approaches, and highlights the importance of engaging these different investors with compelling stories. By talking about specific examples of how impact investing can make a difference to the world, we really bring the concept to life for investors, whatever their motivations, attitudes and preferences.”