Millennials investing in a better future for all, through ethical saving

Simon Lyle

The younger generation leads the way when it comes to all things ethical – here, we show how our money can make a difference.

Many people, young and old, try to make the world a better place where they can – perhaps by recycling, buying Fairtrade coffee or doing volunteer work. They’re grappling with big issues such as climate change and want to do something about it.

But more and more are discovering that where they choose to save and invest their money can have a positive and powerful impact when it comes to social responsibility.

Whether it’s called ethical, sustainable or values-based investing – the under 35s are picking up the baton from previous generations and are now leading the charge.

Mark McLoughlin, a 25-year-old Investment Solutions Analyst for Standard Life, is typical of the next generation of savers, who want their money to have a positive impact now and for future generations, while meeting their own savings goals.

He is passionate about investing ethically and does what he can to make sure his money is only invested where it fits with his values.

If this sounds like something you would be interested in, there are more and more options available.

Make your money work for good

When it comes to your bank, pension, savings and investments, you now have choices which can reflect your values and passions.

Good Money Week, which Aberdeen Standard Investments helps sponsor, runs 29 September-5 October 2018 and offers a great opportunity to learn more and start making good money choices.

Do you know where you are investing?

The money you save into your pension is invested in various funds which invest in different companies over the years until you’re ready to access your money, from the age of 55. Some people get their pension provider or adviser to take the decisions about what their money is invested in on their behalf.

But, if you want to have an impact on the issues that matter to you – everything from modern slavery and inequality to climate change and pollution – one way is to know which funds your pension is invested in and make sure they are aligned to your values. You will still be saving towards your own future and have an impact on society and the planet at the same time.

It’s always worth finding out what the fund manager’s approach is to ethical investing to see if it already aligns with what you would like to achieve.

The good money generation

Mark’s interest in ethical investing began after studying the impact of globalisation at university.

“I think my generation is absorbing more information,” he says. “We have grown up with so much information at our fingertips and huge advances in technology like social media. There’s much greater visibility of the impact of companies behaving badly and that makes it more likely that people will take action.

“I do feel a responsibility to help the planet and my generation has more time to make a difference. If people knew how easy it was to think about your pension in ethical terms, I think many would be willing to take that simple step.

“An ethical option is very important for me and I can only see the desire for it increasing as more people are trying to make a difference wherever they can, whether that’s something as simple as picking up litter or stopping using plastic cups or straws.”

Millennials putting their money where their mouth is

Studies back up this growing demand for all things ethical, especially among younger people. According to the Ethical Consumer Markets Report, ethical spending rose to £81.3 billion during 2016 in the UK.

When it comes to investing, the European responsible investing fund market almost doubled between 2010 and the end of 2016 with EUR 476 billion of assets under management. And the millennial generation is twice as likely as the overall population to invest in companies targeting social or environmental goals, according to a 2017 YouGov survey.

Is there good value for good values?

For anyone interested in matching their investments to their values there is more choice than ever. In the past, ‘ethical’ funds, which excluded certain types of investments like tobacco and weapons, were the only option. These are still popular but they’re now joined by others. For instance, you can now invest in funds that aim to make a positive social or environmental impact.

It’s not just about matching your values. Many investors believe that if companies take into account all the risks and impacts of their operations – including human rights, environmental issues and how they manage their employees – their businesses tend to be better managed. In turn, this can help lead to better financial performance over the longer term. However, the value of investments can go down as well as up, and may be worth less than you paid in.

Those companies that pay no regard to the impacts they are having may risk harming both their reputation and ability to generate long-term investor returns.

Choose where you want to make a difference

The ever-growing range of options and too much jargon can make things a bit confusing, but if matching your investments to your values is something you would like to consider, here are a few of your options (in plain English):

  • Traditional ethical funds: these exclude investments in companies connected to things like alcohol, tobacco and weapons
  • Socially responsible investing (SRI): seeks to invest in the most sustainable companies, those that manage their environmental, social and community impacts for the greater good of society
  • Faith-based options: such as Shariah investing which meets Islamic law principles
  • Impact funds: these invest in companies that intentionally deliver a positive social and environmental outcome as well as seeking a financial return
  • Environmental, social and governance (ESG) investments: This refers to the three main factors an investor would consider. Some investment managers will consider these factors across all of their funds.

Within the different funds you can choose in the ethical sector there can be a real variety in what investment policies are in place and how these are measured and reported on. It’s important to know what your fund is actually investing in to make sure this matches your goals and values. If you’re not sure, never be afraid to ask the questions that matter to you.

We all want a sustainable future to look forward to, if you want to find out more about how your savings and investments choices could make a difference visit Good Money Week or the Ethical Investing pages on our website.


Remember, the value of all investments can go down as well as up, and may be worth less than you paid in. Please note that the information given in this article should not be taken as financial advice. Information is based on our understanding as of September 2018.