With the consumer sector rising as a whole to be the second largest sector constituent of the FTSE 100, ESG focus is driven by, and driving, conscious consumerism. A 2016 Deloitte study found that 56 per cent of millennials will exclude unsustainable companies from their shopping lists. Giants like Unilever have met this head on.
The company reported: “In 2018, our 28 Sustainable Living Brands – those taking action to support positive change for people and the planet – grew 69% faster than the rest of our business. That's up from 46% in 2017. They also delivered 75% of our overall growth.”
And it’s not just consumers who will be driving companies to commit to higher standards. Global organisations are constantly in fierce competition to attract and retain the best talent. The 2018 Deloitte Millennial Survey found that 40 per cent of those polled believe the goal of businesses should be to “improve society”.
The ESG investment agenda and change in consumer behaviour come together in a new frontier for activism: pensions. It’s why the Index will matter more than ever in the 2020s.
The next decade will see the ‘Great Wealth Transfer’ from ‘boomers’ to ‘millennials’. The UK housing market is worth over £7 trillion and even if inheritance tax takes a chunk out of it there is still set to be a wave of money changing hands.
When this money passes to the next generation they will be investing with a very different set of criteria. They want transparency and accountability from the companies in which they work and invest. They will demand more impactful investment options via their company pension schemes, choose their banking provider differently, and will have a lot longer to exert their influence thanks to increasing life expectancy.
Over the next decade membership of the Index will mean that a company is prepared to stand up and be counted – in every sense.