Greg Wait, Riverwater’s resident 401(k) expert, spoke with PLANSPONSOR and had some great suggestions how Defined Contribution or DC plans can respond to increasing demand by participants for ESG funds.
PLANSPONSOR. Sept. 22, 2022. PLAN PARTICIPANTS CLAIM to want environmental, social and governance investment options in their defined contribution plan lineups. The Schroders 2022 U.S. Retirement Survey found that 87% of DC plan participants surveyed want their investments to be aligned with their personal values. It’s not just empty talk, according to the survey: Interested participants follow through with investments: “Of the 31% of 401(k) plan participants surveyed who knew their plan offered ESG options, nine out of ten invested in those options, and almost three-quarters (73%) estimate they allocate 50% or more of their assets to socially responsible choices.”
The growth in the number of ESG funds and their assets supports the case for strong investor interest. Morningstar’s “Sustainable Funds U.S. Landscape Report” for 2021 found that sustainable funds attracted a “record $69.2 billion in net flows in 2021, a 35% increase over the previous record set in 2020. … Assets in sustainable funds landed at a record $357 billion at the end of 2021, more than 4 times the total three years ago.”