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Rich Millennials Push To Put Family Wealth Into Impact Investments

What’s happening? Younger family-office managers are urging their parents to make ESG or impact investments in lieu of philanthropic giving. Some 93% of millennials believe ESG impact is important in investment decisions, reported Sarah Murray in the Financial Times. 

Why does this matter? While sustainable investments and philanthropy are not necessarily mutually exclusive, they can serve similar functions for investors.

Charitable giving has often been used as a means of offsetting the social or reputational costs of an individual or a company’s core business practices and investments, with the net positive societal outcome therefore debatable.

Philanthropy sits in apposition to the conventions of capitalism, while impact investment is embedded in the market system, potentially improving its impact on global societies.

Conveniently, sustainable investments offer substantial returns, at times more so than traditional investments, with the added benefit, in this case, that family offices feel less obliged to donate some of those gains to charity. 

Given all investments are relative, and ESG metrics remain under-developed, there is risk such investments do not have their intended impact. We should be cautious about valuing every investment through the lens of financial gains, since many causes, such as human rights development charities, are unlikely to deliver short- or medium-term financial dividends, but are worthwhile all the same. It is clear there is still a place for philanthropy, too.

Lateral thought from Curation – Could this reshaping of the approach to doing good mark the dawn of social enterprise in mainstream finance? Social enterprise views business and doing good as jointly beneficial, in a similar way that ESG investment does, incorporating a social conscience into core business activities.

Further reading:

Nick Finegold is Founder & CEO of Curation Corp, an emerging and peripheral risks monitoring service.

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