"What I have seen is that the younger investor asks a lot more questions about their advisor's activities and predilections. What are our volunteer activities? Whom do we support? They are looking at the whole picture because they believe that's an important part of SRI investing," Herbert says.
Gen Xers have access to more information about SRI investment choices than their parents did when they were young, says Carol Malnick, a managing director of Boston Common Asset Management LLC, headquartered in Boston and with about a $1 billion in assets. A 25-year veteran in the SRI investment business, Malnick is based in the company's Redwood City, Calif., office.
"The younger client has come forward to say, 'I don't want to do what my parents did,' or 'I want to do more than what my parents did,'" Malnick says. "I got a call yesterday from a 30-year-old woman who said she wanted to move her family inherited money, which had always been at Goldman [Sachs], because she wanted it to be in SRI. There is so much more information made available now, and news about options, alternatives and their impact, where 20 or even 10 years ago there was nothing or very little."
She adds, "The younger clients are excited that we take a very active advocacy role. They want us to engage with those companies to ensure they maintain that high level and that we find ways to show them they can improve.
"One of our [Boston Common] concerns right now is the human rights issue in Uzbekistan and what they can do, through their supply chain, to improve conditions for children working in the cotton fields. We can't change the Uzbekistan government, but as shareholders of these companies, we can ask, through suppliers, to try to make life better for these employees. This is attractive to our clients, especially our younger clients. A 30-something sitting on a family foundation board will be co-signatory on this initiative or sign a letter going to five corporations asking them to review and modify their policies."
Patsky at Trillium says younger investors are more aware than older clients of SRI issues such as climate change and the way in which daily activities affect the environment. "Not to say there are not older clients who don't get it, but all too often, the older generation is used to thinking from the perspective of the way things were 40 years ago," Patsky says.
"You can't disconnect anymore. You can't look back to GE cutting costs by dumping PCBs into the Hudson. There is a cost of being irresponsible. Generation X gets that. Generation X says, 'I want to invest in companies that do the right thing, reduce the carbon footprint and their impact on climate change.' Over time, that will have the cost advantage over companies that didn't do that. You can tell these younger investors that you can do the right thing with your money and do well with your money. These investors realize that is increasingly true," Patsky says.
"Mostly it's the younger investor saying, 'I want to look at this,' or 'I just read an article and I want to do this.' This is a fascinating trend, but most investment advisors in this country still have not done a lot of environmental or SRI investing and have limited knowledge of the area. Most financial advisors in the United States are not considering social or environmental factors. It's a generational issue: The older you are the less likely you are to consider that it could matter in investing. The younger generation, advisors and investors alike, tends to be more open-minded about the inclusion of these factors."