An extensive study commissioned by EQ, the UK’s leading shareholder services provider, suggests a rising number of young activist shareholders will hold companies that fail to live up to their commitments on ethics and the environment to account.
According to the survey of 2,000 retail investors in the UK and US, 83% of Gen Z (18-24 years old) investors are frustrated when a company in which they have invested behaves in a way they deem unethical.
This compares to 81% of Millennial (25-40 years old) investors and 61% of investors who are BabyBoomers (57-75 years old). Some 43% of Gen Z investors feel the companies in which they own shares are not doing enough to communicate their commitment on environmental, social, and governance (ESG) issues.
These young investors are also the most likely to act on their frustrations. 87% of those under 40 intend to vote in an AGM, or already do so, compared with 68% of those between 57 and 75 years old.
These are just a handful of the generational differences across individual investors uncovered by the new report from shareholder specialists EQ.
Other findings include:
- Two-thirds of Gen Z and Millennial investors consider a company’s goals, mission and purpose prior to investing.
- Millennial investors are more likely to be influenced by social media, than a recommendation from a friend or relative when considering investment options. Gen Z is also the most likely age group to be incentivised in joining a company share plan by tax advantages.
The findings of the report come at a pivotal moment for publicly-listed companies, as the influence of retail investors grows.
“Companies that ignore this growing class of investors do so at their peril,” said EQ’s Chief Executive Officer Paul Lynam. “A combination of low interest rates, lockdown boredom, commission-free trading and greater volatility in the financial markets during the pandemic has resulted in a steep rise in the number of Gen Z [and Millennial] retail investors in both the UK and the US. We’ve already seen their influence in some financial markets too.”
The most high profile example was the GameStop trading frenzy in January 2021, in which individual investors were able to send share prices skyrocketing and cause many professional investors to incur significant losses.
The rise of the retail investor looks set to transform the investor landscape. This brings new challenges regarding the way companies communicate and engage with their shareholders whilst providing new opportunities to benefit from a highly dynamic and passionate generation of investors driven by values, as well as profits.
The EQ Shareholder Voice 2021 report has now been published and is available via their website.