November 16, 2015

Scaling Social Finance

Scaling Social Finance

"Generation Lost: Engaging Millennials with Retirement Saving" is a new study by BNY Mellon and Cambridge Judge Business School, University of Cambridge that surveyed 1,253 millennials between July and September this year. In this extract from the study, BNY Mellon’s John Buckley, Global Head of Corporate Social Responsibility, talks about bringing social finance to scale.

Large global environmental and social shifts are presenting significant risks and opportunities that have led to an increased interest in the field of Social Finance. An estimated $30 trillion will transfer from the hands of baby boomers to those of Millennials over the next few decades. The long-term savings industry will need to adjust to the growing decision-making power of Millennials and the impending transfer of wealth to a population with a large number of socially and environmentally-conscious members.

There is great potential to engage the millennial generation in Social Finance investments, but it will require a collective effort by the savings and investment community investment community to overcome key challenges and facilitate increased participation. Engaging this group will be key to bringing Social Finance to scale. While trying to achieve scale Social Finance has to stay faithful to the two key tenets of the sector – offering investors an opportunity to properly protect and grow their financial interests while also pursuing substantive social and environmental objectives.

This report shows Millennials around the world indicate they would allocate a significant portion of their portfolio to Social Finance investments. We found through our own research that one of the key challenges to Social Finance reaching its full potential is an insufficient supply of scalable products that offer attractive risk-adjusted returns. The findings from this survey show that Millennials also think their Social Finance investment options are lacking. To successfully engage, the market needs to develop attractive Social Finance products.

Products need to both reflect Millennials’ risk, return, and liquidity expectations, as well as have clear environmental, social, and governance impact objectives and results. Products must also be designed to engage with Millennials on platforms that fit their engagement style and are intuitive to them.

One of the other requisite conditions to bring Social Finance to scale is transparency. This condition is particularly true with younger savers who are accustomed to having access to a plethora of data points on the world around them – including the impacts of their investments. Avenues to impact investing, financing for the developing world, and environmental finance, already exist for skilled and motivated investors. For financial services providers partnering with Social Finance projects, making these avenues more readily accessible and promoting them more vigorously offers a way to connect with Generation Lost.

To view the report, please click here.