"To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society."
As baby boomers age, society is approaching the largest transfer of wealth that North America has ever seen – but the shift isn't only financial. The women and millennials who will take over trillions of dollars are redefining how investment decisions are made – and the world's largest corporate leaders are taking note.
Because they tend to live longer than their husbands and hold increasingly prominent positions in the workplace, baby-boomer women are responsible for a fast-growing share of their families' fortunes. According to a report by the BMO Wealth Institute, women in the United States control more than half of the country's personal wealth – US$14-trillion – and by 2020, that number is expected to rise to a staggering US$22-trillion. In Canada, women's share of private wealth is expected to more than double from $1.2-trillion to more than $2.7-trillion by 2024.
Over the next few decades, those unprecedented sums will in turn shift to boomers' millennial kids, now the largest demographic in the North American work force. But along with that tidal-wave-sized transfer, there's another major shift on the horizon: an overhaul of how investors evaluate investment risks and opportunities. Traditionally, the measures have been almost entirely financial; if a company showed solid financial growth, beat earnings expectations and provided reliable returns, that was enough. But that's no longer the case.
In one study that involved women with household incomes of more than US$75,000, nearly all of the respondents said that "helping others" and "environmental responsibility" were important, and roughly 60 per cent made purchase decisions based on the company's corporate behaviour.
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