More 401K participants say having ESG options could inspire them to increase contribution rate

Participants want their investments to be aligned with their values

04-11-2022
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New York, NY - According to the Schroders 2022 U.S. Retirement Survey, 74% of defined contribution plan participants who lack or don’t know if they have ESG investment options in their plan, said they would or might increase their contribution rate if offered ESG options. This is up from 69% who said the same in 2021.

The vast majority (87%) of plan participants said they want their investments to be aligned with their values. They also see ESG as a driver of performance: 78% said they believe companies that are socially responsible (ESG focused) will have better results over time than companies not socially responsible.

“The message is clear: defined contribution plan participants want ESG options.  And this year, even more participants are telling us that ESG may be a catalyst to save more for retirement. This is a compelling reason to believe that ESG could become a significant factor in improving participant retirement readiness while offering an opportunity to maximize risk-adjusted returns for participants,” said Deb Boyden, Head of U.S. Defined Contribution at Schroders.

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.

“When choosing investments options for a defined contribution plan, companies should seek products that meet participants’ investment goals and align with their investment priorities and values,” said Marina Severinovsky, Head of Sustainability, North America at Schroders.  “While ESG is most often associated with climate or decarbonization, according to our 2022 U.S. Retirement Survey, the top ESG issues for US investors are actually social in nature – focused on workers and communities.  It’s vital that plan sponsors keep this in mind as the regulatory landscape evolves and more ESG options find their way onto 401k menus.

Where Participants Want Impact

Asked to determine which ESG segments they would like their investments to make an impact on, plan participants that currently invest in ESG or would if they had the option, said:

  • Employee welfare/living wage – 51%
  • Climate change/global warming/carbon reduction – 39%
  • Human rights – 36%
  • Biodiversity (pollution, deforestation, clean water) – 30%
  • Diversity and inclusion – 22%
  • No specific area – 17%

For further information, please contact :

Jennifer Manser O’Rourke, Head of Corporate Communications, North America

+ 1 212 632 2947

jennifer.manser@Schroders.com

 

Note to Editors

For trade press only.  To view the latest press releases from Schroders visit: http://ir.schroders.com/media

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