Sustainable investing has a bright future, as younger generations and those with long-term investing goals, such as pension funds, have expressed interest in it, Morningstar Indexes' head of ESG strategy said at the Exchange ETF conference in Miami Beach, Fla., on Feb. 13.
"There's no reason to expect systematic underperformance from sustainable investments, and there's some reason to believe you might be able to get some marginal long-term benefits out of it," Morningstar Indexes' Thomas Kuh said at a panel on environmental, social and governance investing.
And since large pension funds have "essentially an infinite time horizon … it's no surprise that they're really leading the evolution of sustainable investing globally," Kuh added.
"Sustainable investors care not only about returns, but about how their investments affect the world," Kuh noted.
This is especially true for younger generations, as research shows that 57% of millennials and Generation Z are familiar with sustainable investing, and 36% of them would be curious about integrating it into their portfolios, according to Kuh. This is in contrast to the mere 11% of baby boomers who are familiar with sustainable investing.
The data tells "a simple story," Kuh said, which is that "a lot of money is going to change hands in the next 20-plus years."
"So it's not surprising, you know, as we look forward, to expect that (sustainable investing) is going to grow despite some of the headwinds that we've faced here in the U.S.," he added.
