Stanford Business recently posted an interesting article describing the results of a three-year study conducted to analyze American retail investors' attitudes toward environmental, social, and governance (ESG) issues. 

The article notes that the first survey, conducted in 2022, revealed a significant generation gap, with Millennial and Gen Z investors far more supportive of their fund managers addressing environmental and social issues than their Gen X and Baby Boomer counterparts, and more willing to sacrifice returns in the process.

However, the study reveals that this support began to wane in 2023, and “fell off a cliff” in 2024. For example, according to the article, in 2022, 44% of young investors thought it was “extremely important” for investment companies to use their size and voting power to influence the environmental priorities of their portfolio companies." In 2023, this number dropped to 27%, and in 2024, it dropped to 11%. There was an even greater drop in support from 2022 to 2024 for social and governance practices—47% to 31% to 10% for social practices and 46% to 26% to 7% for governance practices.

The article attributes this drop in ESG interest among Millennial and Gen Z investors to the perceived poor economy, noting that only 10% of young investors in 2024 said they would be willing to lose more than 10% of their retirement savings to bring about environmental improvements, down from 33% in 2022.

The authors postulate that investors may view ESG as a luxury to be eschewed when times are tough." Accordingly, the “future of ESG might therefore depend on what happens with the economy—and on how ESG itself pans out.”