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Save a Seat: Make Room for Millennials at the Investment Table

By 3p Contributor

By Chat Reynders and Patrick McVeigh

As millennials come of age in the business and financial landscape, they are approaching the terrain with a unique, evolved mentality. Today, the world’s first socially-networked generation is demonstrating they are also the world’s purest generation of socially responsible investors.

In contrast to what we’ve seen with baby boomers, millennials often approach investing with a social mindset. They recognize the need to generate returns, but they are just as concerned with the value and impact their investments can make. In fact, a 2013 study by Spectrem Group found that “45 percent of wealthy millennials want to use their wealth to help others and consider social responsibility a factor when making investment decisions.”

This creates a fascinating social investing opportunity and is reflective of a sea-change from previous decades. For this generation, the traditional goal of maximizing returns has taken a seat next to goals with deeper meaning.

For millennials who are ready to embark on a sophisticated investment strategy, there are a few ways to maximize social impact while generating sound financial returns:

1. Invest in industries that prioritize positive change

Millennials are wisely attracted to investments that make a positive impact on a sustainable lifestyle – food production, mobility and clean energy, for starters. Because this generation has seen businesses and companies have great success initiating change, they are drawn to management teams that guide their growth with a social compass. In fact, a Merrill Lynch/Deloitte study recently found that more than half of millennials “believe that business, not government, will have the greatest impact in solving society’s most pressing challenges.”

This statistic demonstrates a new willingness from millennials to put their faith in businesses -- and recycle their capital into industries and corporations they believe in.

By investing in positive change fueled by fundamentally sound companies, millennials may well bridge the gap for skeptical investors who believe social impact requires sacrificing returns. It is our belief that social investing, done correctly, is proving to be sound investing – a reality that aligns with many millennials’ sensibilities.

2. Don’t let your investment decisions be greenwashed

Not all social change fueled by corporations merits investment, of course. A constant flow of news reports on initiatives taken up in the name of the environment have flooded the media, but in reality there are plenty of companies that are laden with “green” facades built in the name of marketing.

Stable social change must be part of a long-term plan supported by management goals or the overarching business model. Companies that are genuine in their social profile will be ethically run, transparent about their operations, and built on solid financials that allow them to thrive. After all, a poorly run or financially unstable organization will not be around long enough to make an impact – or to reward investors.

When choosing a place to invest, make sure the company meets the above criterion to maximize opportunity for true long term value.

There are two companies that consistently meet the profile of a millennials’ potential investment checklist. Both companies, in fact, focus on healthy, GMO-free food and have maintained growth among the generation due to their commitment to transparency.

SunOpta, a leader in creating non-GMO grain supplies, appeals to millennials’ desire to eat foods that are healthy and know where and how they’re sourced. Similarly, Sprouts Farmers Markets is dedicated to enabling consumers to eat well without astronomical up-charges. The grocery store values responsible sourcing, reducing waste and reducing energy use -- all pillars of sustainable business practices.

At Reynders, McVeigh Capital Management, we are seeing the above companies as leaders primed to capture the next generations’ investment dollars.

3. “Community and impact investing” are the new “fixed income”

Traditional fixed income isn’t what it used to be, and millennials are catching on. There is a silver lining, though: With interest rates lingering at all-time lows, investors are discovering they can find the same low-risk, low-yield results by placing their assets in community investing and impact investing.
 Community Development Financial Institutions (CDFIs), for example, have a track record of providing community-based businesses and low-income individuals with access to credit, equity and capital. Fundamentally sound programs can provide consistent returns, lower default risks and direct community benefits. Investors can earn interest on three- or five-year notes while putting their money to work in their own backyards.

Since the early 1980s, the investment world was largely driven by the chase for pure profit and fast growth. Multiple economic downturns, global connectivity and an emphasis on social change created a new investing environment that this generation is ready to tackle head-on. Millennials are now in an excellent position, with the chance both to shape the landscape and to be empowered by it for decades to come.

Chat Reynders, Chairman and Chief Executive Officer of Reynders, McVeigh Capital Management LLC., has more than 25 years of experience in investment management and social venture investing. He has structured and funded public/private partnerships that have brought more than $150 million in revenues to leading cultural institutions. He has for decades produced socially oriented IMAX films, including the Oscar-nominated Dolphins and Coral Reef Adventure.

Chat’s focus on climate change also led him to his role on the board of the One World One Ocean Foundation. He also serves on the board of directors of the Westminster Kennel Club, the Brookwood School, and on the Board of Advisors of Project Adventure.

Image credit: Flickr/Locus Research

Patrick McVeigh, President and Chief Investment Officer of Reynders, McVeigh Capital Management LLC., has more than 30 years of experience in socially responsible investing (SRI). He was an owner and key employee of one of the first SRI wealth management firms, and he served on the board of the Social Investment Forum. At SIF, he pioneered research on SRI, and he has authored articles on finance, ethics and ecology, and contributed to The Social Investment Almanac (New York: Henry Holt, 1992) and Working Capital: The Power of Labor’s Pensions (Cornell University Press, 2001).

Patrick managed one of the first community-owned natural food stores and recycling centers, and helped establish a ground-breaking community loan fund in Haiti. He currently serves on the board of the Waltham Fields Community Farm.

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