Younger investors are more likely to take action to steer the companies in which they invest in a more ethical direction, according to new research.
In a survey of 2,000 retail investors in the UK and US, 87% of the under-40s said they were going to vote in an AGM to act on their frustrations, compared with 68% of those between 57 and 75 years old.
Some 83% of Gen Z respondents, aka people aged 18-24, said they were frustrated when a company in their portfolio was behaving in a way they consider unethical.
Retail investing has boomed recently as people have more time to think about their finances during lockdown and access to trading apps.
The main reason to enter the world of stocks and shares was the potential returns, but the younger generations are more focused on ESG.
Two-thirds of under-40s consider a company’s goals, mission and purpose when they make their decision, with 43% stating they want to see more communication on sustainability matters.
For companies, considering these needs presents an opportunity to build their brand and create advocates, said registrar Equiniti, as opposed to navigating public challenges which may take them by surprise.
“Companies that ignore this growing class of investors do so at their peril,” said Equiniti’s chief executive Paul Lynam.
“We’ve already seen their influence in some financial markets too. The most high-profile example being the GameStop trading frenzy in January 2021, in which individual investors were able to send share prices skyrocketing and cause many professional investors to incur significant losses.”
“The rise of the retail investor looks set to transform the investor landscape. This brings new challenges regarding the way companies communicate and engage with their shareholders whilst providing new opportunities to benefit from a highly dynamic and passionate generation of investors driven by values, as well as profits.”