The Growing Appeal of Socially Responsible Investments for Millennials & Retirees
Senior Home Loan Advisor
Caitlin Chen
Published on January 12, 2021

The Growing Appeal of Socially Responsible Investments for Millennials & Retirees

Hello there! Enjoy this guest post by Rick Pendykoski on the growing appeal of socially responsible investing.

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Also known as SRI (socially responsible investing) or ESG (environmental, social and corporate governance investing), sustainable investments take long-term social improvements into account, rather than focusing on monetary gains alone.

For instance, investing in a tobacco company may give you a decent profit, but doesn’t really help the environment, society or future generations. On the other hand, investing in renewable energy or recycling technology offers both financial and social gain. Enter the social (k) plan, which is really nothing more than a 401(k) with a conscience!

While socially responsible retirement plans were considered the domain of millennials so far, many retirees are also showing an interest in using their investments as a tool for change. Let’s consider what these plans offer, and why they appeal to both generations.

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Why Does Socially Responsible Investing Appeal to Retirees?

For individuals who are already in retirement or close to it, thinking about something bigger than money often becomes a priority. They’ve already seen a lot of changes in the world around them, and they want to leave behind a legacy for their children, grandchildren and other generations to come.

At the same time, they don’t want to lose out on financial gains or take on greater risk than necessary. For this generation, it’s critical to combine the benefits of long-term returns with social or environmental causes, but both are not necessarily given equal priority. It’s a question of practical needs against philanthropic desires.

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In such a context, socially conscious investments allow them to focus on the bigger picture, while still enjoying comfortable retirement savings for their golden years. Since this investment approach offers financial merit in addition to positive environmental and social returns, it offers retirees the best of both worlds.

How Can Retirees Invest in ESG Plans?

While some ESG investments might offer lower immediate returns, they often feature lower risk as well, which makes them a valuable addition to retirement portfolios. With increased availability of value-based measurement tools (for fund and category levels alike), comparing investments for ESG retirement planning is becoming easier for retirees.

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Certain businesses offer SRI options to employees, not just because it creates a “green” image, but also because over two-thirds of employees demand a socially and environmentally responsible 401(k) plan. After retirement, however, it’s up to the individual to create and maintain an investment portfolio that juggles social impact with financial gain.

Financial advisors can help investors find plans that focus on social responsibility in addition to offering high returns, especially over the long term. Social (k) retirement plans offer the perfect opportunity to invest in social initiatives the way a regular 401 (k) allows for investment in mutual funds.

Why Does Socially Responsible Investing Appeal to Millennials?

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As the much-maligned “selfie” generation, millennials are often considered too focused on themselves to worry about the greater good. However, they are also the most eco-conscious and socially responsible section of modern society, both as consumers and investors.

Photo by Rick Pendykoski

In a survey conducted by Bank of America, over 85% of millennials (more than any other age group) either already owned ESG investments or wanted to include them in their portfolio. A research study by OppenheimerFunds and Campden Research also showed similar results, with over 64% of Gen Y expressing an interest in social impact investing.

Socially responsible investing is part of the millennials’ identity, reflecting their focus on socially-conscious lifestyles and consumption patterns. Those with high net worth or family wealth are also combining philanthropy and investment, using their resources to help solve environmental and social issues (both on the local and global front).

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Millennials Work Hand-in-Hand with Advisors for ESG Investing

Putting ESG on equal footing with returns, millennials are also far more likely to invest in green hedge funds, private equity and venture capitalist options than older investors. Unlike their older counterparts, they are not looking for guidance on philanthropic causes, and often choose a charity on their own.

Many advisors feel under-qualified to help with SRI investing, especially with the younger generation. However, an expert isn’t what Gen Y is looking for!

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While millennials want to be in complete control of where and how their resources are invested, they really prefer to work with investment advisors as a team, exploring the options together. They turn to financial advisors for help with structuring their investments and finding opportunities for social impact investing.

The Bottom Line: Social Impact Matters More Than Ever

While traditional investment vehicles like IRA and 401 (k) plans still make it into the retirement planning strategy for both millennials and retirees, social impact plans are definitely gaining ground as well. With a growing interest in social and environmental responsibility, people of all ages are doing their best to make the world a better place!

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Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. He has over three decades of experience working with investments and retirement planning, and over the last 10 years has turned his focus to self-directed accounts and alternative investments.

Rick regularly posts helpful tips and articles on his blog at SD Retirement as well as, SAP, MoneyForLunch, Biggerpocket, SocialMediaToday, and NuWireInvestor. If you need help and guidance with traditional or alternative investments, email him at

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Caitlin Chen Senior Home Loan Advisor
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