PLANSPONSOR - December 2018/January 2019 - 52
RUNNING THE FUND
Let It Grow
ESG is popular among younger workers but raises process questions
A
recent Spectrem Group report,
" Millennial and Generation X
Investors, " suggests that these
two generations are significantly more
attuned to environmental, social and governance
(ESG) investing than are their
older counterparts. In fact, survey results
show that more than half of Millennial
investors (52%) and 42% of Gen X investors
see the social and environmental
responsibility of their investments as
important selection criteria.
As plan sponsors consider the excitement
about ESG investing voiced by
younger participants, they naturally have
some concerns. For one, because sponsors
generally do not like to be forerunners,
many see this as a recipe for attracting the
attention of litigators and regulators.
As a recent survey by investment
consulting firm NEPC shows, the vast
majority (88%) of plan sponsors have
not incorporated ESG into their defined
contribution (DC) or defined benefit
(DB) plan. Of the 12% of respondents that
have taken this step, most (70%) are DC
plans, and more than half of sponsoring
employers (62%) are health-care-focused
organizations.
Much of the latent hesitancy about
ESG use may stem from regulatory
confusion. In April, the Department of
Labor (DOL) released guidance aiming to
clarify the Trump administration's view
about how plan sponsors should consider
ESG factors when selecting investments.
The DOL update reminded plan sponsors
of their broad duty to hold economic
factors paramount when directing participant
assets-going so far as to actively
50 PLANSPONSOR.com December 2018 - January 2019 Art by Haleigh Mun
discourage using ESG funds as default
investments. Still, it did not change the
underlying regulations released under the
Obama administration that affirmatively
allow plan sponsors to utilize ESG factors
to the benefit of plan performance.
Brad Smith, a partner in NEPC's
corporate practice in Atlanta, says nearly
one-third of plan sponsors suggest that,
while they have not implemented ESG
investments, they are interested in doing
so in the future.
The Core Plan Menu
Available on the website of the Forum for
Sustainable and Responsible Investment
is an interface that lets users review the
ESG mutual fund landscape as it exists
today, based on Bloomberg L.P. data. The
public tool is meant to allow investors to
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PLANSPONSOR - December 2018/January 2019
Table of Contents for the Digital Edition of PLANSPONSOR - December 2018/January 2019
PLANSPONSOR - December 2018/January 2019 - Cover1
PLANSPONSOR - December 2018/January 2019 - Cover2
PLANSPONSOR - December 2018/January 2019 - 1
PLANSPONSOR - December 2018/January 2019 - 2
PLANSPONSOR - December 2018/January 2019 - 3
PLANSPONSOR - December 2018/January 2019 - 4
PLANSPONSOR - December 2018/January 2019 - 5
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PLANSPONSOR - December 2018/January 2019 - 58
PLANSPONSOR - December 2018/January 2019 - Cover3
PLANSPONSOR - December 2018/January 2019 - Cover4
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