Ultra High Networth NextGens in Asia and Impact Investing
Next Gens are aware of and warm towards investment approaches that attempt to reconcile concerns about social and environmental issues with profit. About one half of our sample indicated engagement in sustainable investing (51%), and about the same proportion in impact investing (48%).
The average portfolio allocation – i.e., amongst those engaged – is 19% to the former approach, and 14% to the latter (Figure 2.9).The Campden Wealth Global Family Office Report 2019 found about one-third of family offices globally and two-fifths in Asia-Pacific to be engaged in sustainable investing, and one-quarter to be engaged both globally and in Asia-Pacific in impact investing.
Globally, the average portfolio allocations were also 19% and 14%, respectively. Campden Wealth has – across a number of studies – found families suggesting the close relationship between Next Gen engagement and sustainable / impact investing. Thus, on the one hand, it might be expected that we find higher engagement in the present study.On the other hand, we urge some caution because we are conscious that the terms are used loosely and varyingly.
Next Gens who are involved with family investments are more likely than those who are not to indicate engagement with sustainable investing (54% versus 40%),although the subsamples allocate about the same proportion to the approach (19% versus18%). On impact investing as well, the former group are more likely than the latter to indicate engagement (50% versus 43%), but, on average, allocates a smaller proportion to the approach(13% versus 18%) (Figure 2.9).
While Next Gens representing families with under $250m are more likely to indicate engagement in sustainable investing (53%versus 45% for the families with $250m+), the fraction of their portfolios allocated to the approach is, on average, smaller (18% versus23%). These Next Gens are also more likely to indicate a smaller fraction, on average, to impact investments (12% versus 16%) (Figure 2.9).
Call for more clarity / transparency; relevant and proven opportunities; counsel not products
Despite the significant engagement in sustainable / impact investing suggested by the statistics, several of the Next Gens tried to move away from simple narratives.
1. Firstly, they reiterated that the concepts are ill-defined and said that they do not fully see the difference between them. There is a clear call for more clarity and transparency, and greater harmonisation in the ethical investment space.
2. Secondly, Next Gens are not looking to be sold generic products in the ethical investment space. They want to see proven opportunities in their specific sectors.
3. Thirdly, reiterating their preference for direct engagement, Next Gens are interested in making their own businesses more sustainable, impactful, and responsible, without unduly affecting their bottom lines.
Summary
Roughly half the participants are engaged in sustainable (51%) and impact (48%) investing. But Next Gens want more clarity and proven opportunities in their specific sectors. Mainly, they want to make their own businesses more sustainable, impactful, and responsible. For many, COVID-19 is likely to result in growth in socially and environmentally conscious investments.
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