How Millennials Can Make an Impact With Their Money by Lana Khabarova of SustainFi

How Millennials Can Make an Impact with Their Money

By Lana Khabarova, SustainFi

Lana Khabarova of SustainFiMore than any other group, millennials are keen to make an impact with their money. According to a 2021 survey by Morgan Stanley, 99 percent of millennials surveyed were interested in sustainable investing, an all-time high. Interest in sustainability persisted despite the COVID-19 pandemic and climate change is the key focus. The emergence of environmental, social, and governance (ESG) investing is also growing, though the acronym ESG is still largely relevant only to institutional investors and unknown among many retail investors.

In spite of this interest in sustainable finance, confusion about sustainable investing prevails. First, many investors – as many as 70 percent, according to Morgan Stanley – continue to believe that there is a trade-off between “green” investing and returns, despite ample evidence to the contrary. Second, many financial institutions and fintech startups, including brokers, robo-advisors, and banks, have caught on to the ESG trend and launched new products. However, having so many sustainable, socially responsible, or green products is very confusing, especially when the differences between them are not clearly explained. One of our goals at SustainFi is to demystify sustainable and ESG investing for retail investors.

So what can millennials do to make more of an impact with their finances? They should start by looking at how they invest their savings and which financial institutions they have relationships with.

What Can Millennials Do to Invest Sustainably?

• Funds and Stocks

First, many millennials say that they care a lot about climate change and try to be more sustainable in everyday life. For example, they go on a plant-based diet or get solar panels or buy electric cars. Yet many of them don’t know how their 401(k) or IRA is invested. By default, many 401(k)s are in target-date mutual funds that invest in fossil fuels, which may conflict with the 401(k)-holder’s goal to be more sustainable.

So, millennials (and other groups!) who want to be more sustainable should take a look at how their money is invested. It’s easy to look up the holdings of mutual funds or exchange-traded funds (ETFs). For those investors who don’t want to own fossil fuel stocks at all, there is a fund screener called Fossil Free Funds.

We are also seeing a lot of interest in investing in clean energy and cleantech, which probably started with Tesla’s meteoric rise. Indeed, investing in “good” sectors may be more impactful than simply avoiding “bad” sectors. There are multiple funds that invest in renewables, such as the iShares Global Clean Energy ETFs, though many investors prefer picking individual stocks.

Other options include environmental, social, and governance (ESG) mutual funds, which add social and governance metrics to the investment selection process. Although there has been a lot of controversy about how ESG metrics are calculated and whether they even matter, ESG funds have been very popular among institutional investors. They are also finding their way to retail investors through robo-advisor portfolios.

• Robo-Advisors

Robo-advisors are automated financial advisors that rely on algorithms to create portfolios suitable for investors’ goals, such as risk tolerance and years left until retirement. There are now over ten robo-advisors marketing sustainable, socially responsible, ESG or impact portfolio options. Most of these portfolios invest in ESG funds from asset managers like BlackRock.

It’s an easy way for beginners to get started with sustainable investing, and it’s good to see so many options. Robo-advisors offering ESG portfolios include Betterment (which has three impact portfolios), Wealthfront, Acorns, Personal Capital, and many more. Even mainstream financial institutions like E*TRADE and Goldman Sachs Marcus Invest have sustainable offerings. Fossil-fuel-free options are also available.

• Greener Crypto

Second, investing in crypto, though risky, has been incredibly popular among all demographic groups of late, though millennials and Gen Z members dominate. At the same time, most popular cryptos including Bitcoin, Ethereum, and Dogecoin, are very energy-intensive to mine, so owning a lot of these cryptos is not exactly climate-friendly. Even if crypto mining is powered by renewables, it means that renewable energy is not being used for some other purpose (like heating homes.) So millennials who are focused on sustainability should know the difference between energy-intensive cryptos like Bitcoin and Dogecoin, and ones that are not energy-intensive, like Cardano and Nano. Some crypto investors are even buying carbon offsets to offset the carbon footprint of their crypto wallets.

• Neobanks

Third, we are seeing an explosion of green neobanks that target millennials who care what their money is funding. Traditional financial institutions have always funded the oil and gas industry. “Greener” fintechs have emerged as a response to that.

The best-known green neobank, Aspiration, has been around for years, but 2021 saw the launches of Ando Money, Climate First, and Atmos Financial. All of these promise to not use deposits to fund fossil fuels and some will even invest your money in green projects. Aspiration has recently launched a credit card that plants trees when customers spend, too.

Now, switching banks is not very convenient and a lot of people will never go down that route no matter what. Many startups are still working on things like customer service, but the offerings are definitely improving. Customers can get perks like high APYs and cash back. As a bonus, many of these institutions are also certified B Corps or members of the Global Alliance for Banking on Values (GABV).

As millennials’ interest in sustainability and climate change has grown, there are more green finance options than ever before. Pretty much anyone can find investments or banking options that suit their values and help them make an impact.


Article by Lana Khabarova is the Founder of SustainFi, a personal finance site that connects investors who want to make an impact with the right products and services.

Energy & Climate, Featured Articles, Impact Investing, Sustainable Business

Leave a Reply

Your email address will not be published. Required fields are marked *

Signup to receive GreenMoney's monthly eJournal

Privacy Policy
Copyright © GreenMoney Journal 2023

Website design & development by BrandNature

Global Events Calendar

View All Events


26sepAll Day27The ESG Forum 2023 - virtual

26sepAll Day29Greenbuild International Conference and Expo – DC

27sepAll DayESG in Fixed Income Global Series 2023 - NYC