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Sustainability Matters

Making Sustainability Part of Your Defined-Contribution Plans

ESG criteria could help plan participants reach their goals.

Investors are very interested in sustainable investing, but one of the main ways most people invest, through their workplace defined-contribution, or DC, retirement plans, typically have no sustainable options. Among DC plans for which Vanguard serves as record-keeper, for example, only 8% had a sustainable option in 2016. I expect that to change in the not-too-distant future. Here is my reasoning, as well as some ideas for how DC plans can incorporate sustainability into their lineups.

First, the demand is there. The Natixis 2016 Survey of U.S. Defined Contribution Plan Participants found significant interest in sustainable investing, which I define as any investment that considers environmental, social, and corporate governance, or ESG, criteria and their impact. Although interest in the Natixis survey was highest among younger people and women, clear majorities of men and of all age groups expressed interest.