Millennials focus on sustainable investing
Millennials attach great importance to social and environmental issues. The Credit Suisse "Millennials’ values" Supertrend addresses this issue. Two strategies for sustainable investing are applied.
Millennials value sustainability
Sustainability is a core value for the Millennials, a powerful generation given that they represent 50 percent of the world’s population. The Millennials are becoming more and more demanding with regard to sustainability and making a positive impact, both when it comes to consuming and investing. As consumers, they require companies to show how they make a positive contribution to society and the environment before buying a product.
This focus is barely surprising as evidence of climate change is growing and pollution and health hazards are becoming increasingly apparent. The Millennials generation is also an important investor segment. After all, they are set to inherit more than 40 trillion US-dollar of wealth in the coming decades.
The importance of investing sustainably
From an investment point of view, applying Environmental, Social and Governance (ESG) criteria to stock selection has been shown to improve risk management without lowering returns. Further, companies whose ESG scores are improving tend to outperform those with static ESG scores.
ESG factors in the area of business
Source: Credit Suisse
There is a strong business incentive for companies to implement sustainable management practices with regard to ESG. Once these practices are deeply rooted in an organization’s culture and values, they can provide a competitive advantage in the long run. In turn, not focusing on sustainable factors could pose reputational, financial and litigation risks, which could make companies more vulnerable. Therefore, ESG not only improves risk-adjusted investment performance. It is also becoming a prerequisite for companies to operate.
Invest sustainably with the "Millennials’ values" Supertrend
In the "Millennials’ values" Supertrend, Credit Suisse applies an ESG overlay to its entire stock selection. This means that Credit Suisse focuses on companies with a top ESG score in the areas of relevance to this Supertrend.
Furthermore, sector specialists have been asked about the most important sustainability issues impacting their sectors in order to identify stocks that embrace sustainability and should benefit from their approach in this area. These stocks are then included in the "Sustainable business and investment" subtheme of the "Millennials’ values" Supertrend.
