Gen-Y May Prove Major Challenge To Renewable Investment
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:
- Pension providers should use auto enrollment to form new partnerships that build consumer trust in investing
- The savings sector should actively communicate product level information on climate risks to engage savers on these issues
- The government should require pension providers which benefit from auto enrollment to disclose to customers the carbon impact of their investments
- 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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