Millennial generation is engaged in socially responsible investments.
This is good news but there are two caveats.
First, social responsible (SR) measures are noisy and still being developed. It is challenging to measure social responsible well and there is a high chance that firms may just dupe the investors by checking the box. Hence, it is important for the millennial generation to do their own due diligence. Millennials can start by looking at innovation.org and givewell.org. Of course, SR may not always coincide with charity work but it gives a good indication what problems are there and need to be solved.
Second, social responsible may not be optimal. It may seem following certain procedures may help society but may be ineffective. For instance, diversity for only diversity sake alone may not be so beneficially. Also, certain recycling procedures may be prohibitively expensive and inefficient and there may be better ways to offset the pollution.
Third, there are better ways to solve problems than investing. The best way is to not use a company's product that is really doing harm. If you think the product produces so much pollution, don't consume it and urge others not to buy as well. If you think certain retailers labor practices are bad then don't shop there. Vote with your feet.
Hence, it is great that Millennials are more conscious but they must be aware of the shortcoming of social responsible investments. This will allow them to make better decisions and improve the world.
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