How parents can help spark Gen Z’s interest in sustainable investing – The National | Jewelry Dukan

Parents often use philanthropy to emphasize a family’s core values ​​and to introduce their children to the concept of wealth management. However, it is proving to be much more difficult to involve the next generation in the family’s investment activities.

Sustainable investing can help change this dynamic. Interest in the opportunities offered by sustainable investing in the Middle East is growing.

It is noteworthy that Cop27 will be held in Egypt in November 2022. This interest is in line with government initiatives such as the UAE’s announcement to reach net zero by 2050.

Furthermore, value investing is not new in the Middle East: Sharia-compliant strategies are a prime example.

Young people are keen to explore ways to make a positive impact with their assets and seize opportunities in renewable energy and sustainable food production.

Demonstrating how financial assets can be used responsibly to generate profits and address social or environmental issues can spark a lifelong interest in investing for a generation eager to save the world.

The bright spot: Parents don’t have to forego investment returns to take their kids ‘where they are’, as was once widely assumed when it came to sustainable investing.

In fact, this myth has been dispelled: Sustainable investing is an investment strategy that can keep up with traditional benchmarks.

Understand the next generation

To deepen their children’s interest in investing, parents should understand their long-term financial goals and how investing can have an impact that aligns with their children’s passions and causes close to their hearts.

Although some parents worry that including sustainable investments would mean missing out on the competitive returns their portfolio is aiming for, it actually appears that including sustainable goals will position your portfolio for sectors that are poised for growth and at the same time achieve their goals.

Additionally, it puts their children on the path to becoming informed investors.

Parents should also consider how their family should use their wealth and over how many generations. This includes considering the investment knowledge their children may need to effectively manage their resources.

Parents should also ask their children what other goals they would like to pursue with their investments besides financial gain, as well as their interests in current events and investment topics.

Driving positive change through investment

Young adults today recognize that philanthropy is just one component to making positive change happen, and purposefully make collaborative efforts to improve the world through their daily actions. This includes their voting preferences, travel plans, spending habits and investment approaches.

Introducing young adults to sustainable investing, an umbrella term for investment strategies that encompass financial as well as social and environmental goals, can have a positive impact on them.

This can introduce them to the world of finance by focusing on issues and concerns that are important to them, such as: B. Diversity, climate solutions, financial inclusion and education.

It can help them gain a deeper understanding of the wealth management ecosystem, from the role of individual investors to the impact of institutional capital. And it can put into practice the core values ​​of the family.

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Watch: Meet the teenager and his sister launching a new cryptocurrency

Wide range of investment opportunities

Sustainable investing encompasses a wide range of investment strategies and trends, including:

  • Value-Based Investing: an investment approach that reflects investors’ values ​​by avoiding or increasing exposure to specific companies, industries or business practices
  • IT G: an investment strategy where consideration of environmental, social and governance factors plays a crucial role in implementation and investment decisions for portfolio construction
  • Thematic investing: Investing in companies and funds that target specific themes or issues, such as water, clean energy, and gender diversity
  • Impact investing: invests in companies, organizations and funds that aim to achieve positive, measurable social and/or environmental outcomes in addition to financial returns

Portfolio performance diversification

Sustainable investing is a long-term trend for income investors, not a passing fad or concession to Gen Z interests.

Adding sustainable investments to their portfolio can actually allow investors to maximize portfolio returns while reducing risk.

Sustainable investing does not require a performance compromise. Studies have shown that ESG factors, for example, improve portfolio returns by reducing volatility.

In addition, sustainable investing can provide opportunities to invest in megatrends such as sustainable agriculture and electric vehicles, which are supported by a wide range of stakeholders including governments, consumers, wealth managers and companies and can offer growth prospects.

Investors can also maintain their goals as they can add sustainable investments to an existing portfolio without changing its risk/return profile.

Finally, investors can make a difference as they have a variety of environmental and social factors to choose from, including clean energy, racial justice, and health and well-being, to name a few.

Amanda Lott is Head of Wealth Planning Strategy and Jessica Matthews is Global Head of Sustainable Investing at JP Morgan Private Bank

Updated September 23, 2022 at 5:00 am

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