Among the many things that are becoming clear as environmental, social, and governance (ESG) and sustainable investing take shape is the commitment to these investment styles displayed by younger demographics.
ESG and sustainability are priorities for Millennials and Gen Z, and they’re putting their money where their mouths are when comes to investment choices. That could be a long-term plus for exchange traded funds such as the Goldman Sachs Future Planet Equity ETF (GSFP).
Perhaps more than any other generations, Millennials and Gen Z are consuming education and news about climate change in vast quantities. Add to that, they’re entering the workforce and climbing the income ladder as more climate-related investment strategies come to market. Those factors could support long-term adoption of ETFs such as GSFP.
“We have now reached an inflection point where the support from politicians, consumers and technology has never been greater and more unified,” noted Goldman Sachs Asset Management (GSAM). “We believe this will trigger a green revolution, transforming our current way of life at the speed of the digital and at the scale of the industrial revolution. In our view, this could offer investors the potential opportunity to generate highly attractive financial as well as impact returns.”
GSFP, which is an actively managed ETF focusing on decarbonization services and technologies, is gaining relevance as more investors, professionals and retail alike, focus on the United Nations Intergovernmental Panel on Climate Change (IPCC).
“The IPCC’s report, written by 234 scientists in more than 60 countries, makes it clear that the policy measures required to deliver the deep emissions cuts in the necessary time frame demand actions from nations across the globe and need to happen immediately. Up to this point, politicians across the world have failed to reach agreement on more stringent measures,” added GSAM.
GSFP’s status as an active fund could be attractive for younger investors because it indicates that the ETF has the flexibility necessary to be responsive to increases in climate-related government spending as well as corporate efforts to reduce carbon footprints.
Bottom line: GSFP could be at the right place at the right time as more younger investors prioritize climate-related investments as valuable, necessary parts of their broader portfolios.
“Crucially, younger generations are not only more concerned about the environment, but their spending has also started to reflect their values. Therefore, we believe that consumer demand for sustainably sourced goods and services will force companies to adapt and find new solutions, because there will be a commercial and competitive imperative to do so. Eventually, it may become a political imperative to do so as well, as more effective legislation will reinforce the momentum of the transition,” concluded GSAM.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.