US. Window opens to increase ESG investments in DC plans
Retirement plan service providers are betting that demand for ESG investments in plan menus — until now muted — is set to grow.
Take, for example, Morningstar Inc. In October, the company’s investment management arm announced it had teamed up with Plan Administrators Inc., a retirement plan administrator and record keeper, to launch a pooled employer plan this year featuring an investment menu made up almost exclusively of ESG funds.
Five months later, Transamerica Corp. followed suit with the launch of a “group plan” — a close cousin to a pooled employer plan — that uses an ESG-driven target-date series as the plan’s qualified default investment alternative.
Robo retirement plan providers, too, are moving in on the opportunity.
In March, online investment adviser Carbon Collective Corp. launched a climate-focused 401(k) plan whose investments it says favor companies that are developing fixes for the world’s environmental problems and preclude those hooked on long-term fossil fuels.
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