April 28 Impact Investing: the Facts Speak for Themselves
At Social Impact Capital, our investment thesis is shaped by the profound demographic shifts that are occurring: the data indicates that impact investing and companies with a positive benefit to society will continue to outperform.
For students of market research, its so rare to run across data that has this amount of force, we thought we could simply let the facts speak for themselves.
Here are some of the reasons why impact investing is growing at such a rapid rate, and should continue to grow rapidly over the next 50 years.
- The biggest transfer of wealth in human history has started. Over the next 35 years as an unprecedented $58.7 trillion dollars of wealth transfers to women and millennials. Paul G. Schervish and John J. Havens, Millionaires and the Millennium: New Estimates of the Forthcoming Wealth Transfer and the Prospects for a Golden Age of Philanthropy, The Center on Wealth and Philanthropy (CWP) of Boston College, May 28, 2014
- Women will inherit 70% of this wealth. By 2030, two thirds of the wealth in the United States will be in women’s hands. Melanne Verveer, Ambassador-at- Large for Global Women’s Issues, US Department of State, Women as Economic Drivers, The Journal AARP International
- Women care greatly about impact investing. 76% of women say they want to invest in organizations promoting social well-being. 90% of inheriting women will become solely responsible for their wealth. Over 70% of women fire their financial advisors within one year of financial control.
- Millennials care greatly about impact investing. 93% of Millennials believe that a company’s social and environmental impact is key to their investing decisions; this number is up from 74% only two years ago. 67% of millennials agree that “My investment decisions are a way to express my social, political, or environmental values.” 61% of millennials feel lower returns on an investment in exchange for having a positive impact on society or the environment are acceptable. 71% would turn down the opportunity to make a significant sum of money if it required investing in a company with a negative impact on society or the environment. U.S. Trust, Insights on Wealth and Worth, 2016; 2014.
- Millennials care deeply about social change. 7 in 10 young adults consider themselves social activists; this was nearly double the amount from one just one year before. Survey by TBWA/Worldwide and TakePart of Participant Media, 2011.
- The old financial advisors will be fired. 86% of heirs in global family offices intended to fire their parents’ investment advisors once they inherited their wealth. Rothstein Kass, 2009
- The market for impact investing is already large. $13.6 trillion of professionally managed assets incorporate environmental, social and governance (ESG) concerns into investment selection and management, or 21.8% of total AUM. The Global Sustainable Investment Alliance, Global Sustainable Investment Review 2012.
- The market for impact investing has experienced huge growth. From 2012–2014, sustainable investing experienced a growth of 146%. New York Society of Security Analysts
Here are some of the reasons why companies that have a social impact should outperform.
- Employees (particularly millennials) will work for less pay. 45% of employees would take a 15% pay cut to work for companies that make an environmental or social impact, and 50% of millennials would. Cliff Zukin and Mark Szeltner, Talent Report: What Workers Want in 2012, Rutgers University, 2011.
- Employees want to work at companies that contribute to society. 80% of a sample of 1,800 13-25 year olds wanted to work for a company that cares about how it impacts and contributes to society. Jeanne C. Meister and Karie Willyerd, The 2020 Workplace, HarperCollins, 2010
- Sustainability creates better businesses. Companies with a strong sustainability program had 55% better morale, 43% more efficient businesses processes, 43% stronger public image, 38% better employee loyalty. The Society for Human Resource Management (SHRM), in partnership with BSR and Aurosoorya, Advancing Sustainability: HR’s Role, 2010.
- Consumers prefer social impact companies. 91% of global consumers are likely to switch to brands that support a good cause, given similar price and quality. 92% would buy a product with a social and/or environmental benefit if given the opportunity, and more than two-thirds (67%) have done so in the past 12 months. 84% say they seek out responsible products whenever possible Cone Communication/Echo Global CSR Study, 2013; 2015.