Investors’ views on ESG strategies and how the inclusion of ESG options in defined contribution plans might impact their participation.

ESG Options in 401k Plans Could Improve Savings Rates

Among the topics explored in the Schroders 2022 U.S. Retirement Survey were investors’ views on ESG strategies and how the inclusion of ESG options in defined contribution plans might impact their participation. Key findings of the survey include: 

  • Most defined contribution plan participants (87%) want their investments to be aligned with their values.
  • Nearly three-in-four (74%) plan participants said they would or might increase their overall contribution rate if offered ESG options. This is up from 69% who said the same in 2021.
  • The majority (78%) believe companies that are socially responsible (ESG focused) will have better results over time than companies not socially responsible.

Other findings among plan participants include:

  • The top three ESG issues that are most important to participants include: employee welfare/living wage, climate change/global warming/carbon reduction, and human rights.
  • Of the 31% of 401k plan participants 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.
  • A significant percentage of investors (40%) report that having the ability to invest in ESG options in their 401k plan would improve how they view their employer.

"It’s no longer a question of if more ESG options will find their way onto 401k menus, but when. Against this backdrop, plan sponsors should be taking steps to better understand the priorities and values of their participants to ensure menu options will put investors on a path toward better outcomes."

Deb Boyden

Head of US Defined Contribution

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2022 US Retirement ESG Report
2021 US Retirement Survey Report
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Deb Boyden, Head of US Defined Contribution

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