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Published on August 25th, 2014 | by Joshua S Hill

7

Gen-Y May Prove Major Challenge To Renewable Investment

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August 25th, 2014 by  

Common thinking over the past decade has been that the current trend in renewable energy investment will only continue to grow as Generation-Y babies grow and start making their own financial decisions. However, a new report published by Green Alliance and sponsored by Hermes Fund Managers has concluded that Generation Y has “very little interest” in long term saving and has no desire to “seize the initiative to address sustainability threats”.

Generation Y, or millennials, are those classified as born anywhere from the early 1980s to the early 2000s (though, from this reporters point of view, that age-range should be shortened down to the late ’80s at its earliest). Specifically, the report interviewed 37 “young professionals” aged between 18 and 34 — arguably a cross-section of at least two generations.

The report states that “the scale of disillusion felt by these young adults towards financial institutions is undermining their trust in investing.” Secondly, these same ‘young adults’ “are largely unaware that the value of their savings is being exposed to climate change-related risks.”

Furthermore, the common assumption that Generation Y will seize the initiative to address sustainability threats was not borne out in the attitudes we found in our focus groups. Many were skeptical about financial approaches focusing on investment opportunities in the low carbon economy. There are signs that this cohort may actually feel less agency and empowerment to influence their environment than previous generations.

Those Gen-Y labelled respondents make up the future of support for the renewable energy industry, and this small report could be revealing devastating news.

The report made four separate recommendations based on their research — two for the savings sector, and two for policy makers:

  1. Pension providers should use auto enrollment to form new partnerships that build consumer trust in investing
  2. The savings sector should actively communicate product level information on climate risks to engage savers on these issues
  3. The government should require pension providers which benefit from auto enrollment to disclose to customers the carbon impact of their investments
  4. The government should explore options for reforming pension tax relief so investments in high carbon assets are no longer subsidized by the state

The report (PDF) is clear that “society needs a strong, resilient savings sector to tackle major social and environmental challenges,” and is pessimistic that the next generation to take control of the investment sector is going to be able, or even willing, to step up to that challenge.

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About the Author

I'm a Christian, a nerd, a geek, and I believe that we're pretty quickly directing planet-Earth into hell in a handbasket! I also write for Fantasy Book Review (.co.uk), and can be found writing articles for a variety of other sites. Check me out at about.me for more.



  • NRG4All

    If they are going to use such a small sample size the structure of the questions is very important. There are probability curves for a binary response questionnaire and others for an analog response, but in either case with such a small sample size it would be useful to state the standard deviation about the mean to see how cohesive the responses are.

  • Tom Capon

    “Specifically, the report interviewed 37 “young professionals” aged between 18 and 34 — arguably a cross-section of at least two generations.”

    37 people is not a cross-section, it is a core sample. This “research” falls several orders of magnitude short of being statistically relevant. I will increase the sample size by 5% and add my own anecdotes: I’m in my late 20’s, have a Nissan Leaf with 15,600 miles on it, and my brother in his mid-20’s just bought one as well–for his first car. We don’t see EVs as a compromise, they are an improvement in every way, and every drop of gasoline we save the planet from is worth it.

    • Omega Centauri

      I’m glad at least a few millenials have enthusuiasm for the transition, and their part in it. My anecdotal experience supports the articles conclusion, on the investment side of things, there just isn’t an enthusiasm for green investing.

      • Tom Capon

        Are you sure that attitude has anything to do with “green” investments, or just the idea of investments in general? Are they investing in Google and Microsoft but not SolarCity, for example?

        • RobS

          Exactly, we have grown up watching the Lehman brothers collapse, the GFC, the Enron accounting scandle. We have very little faith in financial institutions and the “free” market in general. I would be far more interested had they also asked about direct investment, are gen Ys more likely to build efficient homes and install solar, are they more likely to vote for politicians who have strong environmental policies, those are the things that are going to drive change.

      • Offgridman

        It would seem that some very broad assumptions are being made from a very small survey size.
        Other surveys of Gen Y (or just those in their late twenties) show that more negative investing of all types is happening. Fewer purchases of cars, new or not, fewer purchases of homes with the long term maintenance and mortgage costs. So it isn’t just investment or retirement planning not being purchased. Of course a lot of this is said to be due to high education debt for this generation, but to some extent I think in addition there is the realization that either for work or other reasons they figure to be moving on to new cities or locale’, or new jobs and careers. Their parents were very much a mobile generation and they expect the same for themselves so don’t need or want obligations holding them back.

  • TedKidd

    “Generation Y has “very little interest” in long term saving and has no desire to “seize the initiative to address sustainability threats”.”

    I think: “All humans tend toward short term, not just a specific generation” and “So what?”.

    Financial markets have this magical way of using cap rates to make large investments into monthly cost. We are beyond the point where non-investment oriented consumers have to make the leap and become low return “investors” in order for renewables to grow. We are beyond the point where a substantial portion must be subsidized in order for there to be capital return that takes 100’s of years.

    Renewables are risk predictable. Renewables offer energy at competitive price. They are now competitive on their own. This study is so 2004, it misses the point. In fact it almost looks like intentional obfuscation of what is currently meaningful.

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