PLANSPONSOR - January - February 2024 - 28

CONFERENCE COVERAGE
Livestream ■ November
Livestream ■ November 8, 2023
Navigating ESG
Navigating ESG
Planning a route to sustainable investing goals
Planning a route to sustainable investing goals
Environmental, social and governance investing is just called " investing "
in other parts of the world, but regulatory flip-flopping and political
wrangling have discouraged a similar experience in the U.S. Despite this,
there is an appetite for ESG, or sustainable, investing among retirement
plan sponsors, plan advisers and participants. In a one-day livestreamed
event, experts spoke about the status of ESG investing for asset owners,
plan sponsors and plan advisers, as well as provided guidance for
where investors can acquire information and recommended questions
they should ask as part of their due diligence.
Surveying the Landscape
INSTITUTIONAL investors have much work
to do to learn not just how to integrate
sustainable investing into their decisionmaking,
but how to define it in the first
place, panelists told institutional investors
in the " Surveying the Landscape " session.
The average plan sponsor and retirement
plan adviser
still misunderstand
what investment solutions fall under the
category of environmental, social and
governance factors, said Bonnie Treichel,
founder and chief solutions officer at
Endeavor Retirement.
Often people mistakenly believe " 'if
28 PLANSPONSOR.COM January - February 2024
it doesn't say ESG in the title of the fund,
or if it's not named that, or it doesn't say
sustainable, then we don't have ESG in our
lineup,' " Treichel says.
True ESG integration, as defined by
the CFA Institute, is ongoing consideration
of ESG factors within an investment
analysis
and
decisionmaking
process,
with the aim to improve risk-adjusted
returns, Treichel continued. It requires
far more knowledge about a fund than
just to recognize whether the title was
" greenwashed " -i.e., whether it makes the
fund appear more sustainable than it actually
is, she said.
prevents
Treichel said a large education gap
profesaverage
investment
sionals
from accurately assessing ESG
considerations.
When it comes to market investing,
ESG stocks are also difficult to define and
benchmark, said Witold Henisz, vice dean
and faculty director of the ESG Initiative at
The Wharton School of the University of
Pennsylvania. But that is fairly common
in the world of equities, similar to
" ascertain[ing] what is a value stock, what
is a growth stock, " Henisz said.
The lines get no clearer when it comes
to performance of stocks that include ESG
factors. Henisz pointed out that research
shows no on-average benefit to using an
ESG strategy-but that can also be said for
many other strategies, as no criteria consistently
outperforms the market.
Henisz
concluded that definitions
and standards will be key to navigating the
future ESG landscape: " We need to have
more regulation to root out greenwash and
really set a standard that, if you're going to
say you're doing ESG integration, you've
got to meet these criteria. " -Natalie Lin
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PLANSPONSOR - January - February 2024

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