News | 02.14.22
Investment Firms Watching 401(k) Market for ESG Growth
Nearly one in five defined-contribution employee-sponsored retirement plans in Fidelity’s business in 2020 included at least one environmental, social and governance (ESG) investment option, and the company expects that proportion to increase amid greater awareness by young workers. “Human resource departments are hearing directly from their employees about wanting to have better options that align with their values,” said Keri Dogan, senior vice president of retirement income and workplace investment innovation at Fidelity. “A lot of this is generational,” Dogan said. “There’s clearly growing demand for climate-specific [investments].” Currently, only about 5% of 401(k)s include ESG options, according to reports last year from the Plan Sponsor Council of America. A turning point for ESG in retirement plans could be the Department of Labor’s recently revised stance on them, including the permissive use of ESG target-date funds as default options.
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