ESG Investments Could Find Their Way into 401(k)s

Socially responsible investing is not just resonating with younger investors. Older demographics are also looking into environmental, social, and governance investment options for retirement and 401(k)s.

“Interest in ESG investing is broad,” Jim Altman, Middle Market Pennsylvania Regional Executive at Huntington Bank, told Smart Business. “Plan participants of all ages are asking more questions about how companies behave, their impact and their intentions.”

Some employer plan sponsors are considering ESG options for investment portfolios to capture the interest of socially conscientious investors. Adding an ESG option to a plan can help signal to some that the employer is showing consideration for an evolving investment landscape. However, plan sponsors that constrict investments to only ESG options could come under fire by plan participants if the investments are seen as too politicized or impinging on individual views.

Consequently, Altman argued that the best approach is to take more complementary strategies whereby existing investment options add another layer of ESG options to complement the existing plan.

“ESG investing is a growing and worthwhile discipline in investment management. Employers shouldn’t be afraid to tread into this area, but should do their research before acting,” Altman added.

For more news, information, and strategy, visit the ESG Channel.