Younger investors are showing more enthusiasm for responsible investments, and their advisors who might have worried about returns can be assured that ESG funds perform just as well as others. In fact, new data showed no meaningful difference in returns when comparing responsible investing indexes with relevant broad market indexes.

“Incorporating environmental, social and governance (ESG) criteria in individual security selection can in fact deliver market competitive returns,” said Amy O’Brien, managing director and head of TIAA Global Asset Management’s Responsible Investment team.

Ten-year average annual performance for responsible investing indexes ranged from 6.05 percent to 7.49 percent, compared to 7.31 percent and 7.35 percent for the S&P 500 and Russell 3000 indexes, according to the TIAA Socially Responsible Investing Performance Analysis.

“We also looked at volatility and that was close to what a typical broad-based benchmark is experiencing,” said Jim Campagna, managing director with TIAA Global Asset Management. Responsible investing indexes include the Calvert U.S. Large Cap Core Responsible Index, the Dow Jones Sustainability U.S. Index, FTSE4Good U.S. Index, MSCI USA IMI ESG Index and the MSCI KLD 400 Social Index.

“Too many investors still question how to define responsible investments, whether they can produce comparable returns to broad benchmarks and how advisors and investors can distinguish between what is and is not a responsible investment,” O’Brien said.

Millennial investors are far more familiar with responsible investing than others. Some 90 percent say they want their investments to make a positive impact on society compared to 74 percent of boomers and Gen Xers.

“There’s a disproportionately high degree of support among millennials,” said O’Brien. “Millennials really dig into information and they have a lot of desire to express their values through workplace purchases they make and causes they support.”

Old myths, however, persist. Some 61 percent of investors say their advisors did not bring up responsible investing in the past 12 months, 46 percent of advisors say they have never offered responsible investing products to their clients, 35 percent think their clients aren’t interested in responsible investing and 36 percent of advisors don’t know how to accurately evaluate responsible investments.

“As an industry, we need to do a better job of helping investors understand how these strategies work and what role they can play in a diversified portfolio,” said Jill Popovich, who manages financial advisors as managing director of Individual Advisory Services with TIAA.

The responsible investing issues millennials are concerned with include energy, tobacco, the morning after pill and pharmaceutical testing on animals.

“The opportunity we believe is there for advisors to engage clients on this and there’s also an opportunity for employers in terms of what they can offer on platforms,” O’Brien said.

If advisors do not catch up on responsible investing, they face the increasing possibility of losing clients.

Some 87 percent of millennials are more likely to stay with an advisor who is communicating with them about responsible investing.

“As this next generation of investors and others come to the advisor and are seeking information, they are moving beyond just thinking about it and want to put some of these strategies into action in their portfolios,” said O’Brien.