The 2019 Survey of Plan Sponsors and Retirement Savers from American Century Investments found 90% of defined contribution (DC) retirement plan sponsors who offered or are considering offering environmental, social and governance (ESG) investments believe their participants would be interested.

However, only 37% of participants actually expressed some interest in ESG options. Diane Gallagher, vice president, retirement value add, American Century Investments, in Kansas City, Missouri, notes that those individuals would be interested if the ESG investment’s performance was comparable to the average product.

According to the ESG Investor Sentiment Study from Allianz Life Insurance Company of North America, nearly two-thirds (64%) of Millennials said ESG issues are important in their investing decisions, with Gen Xers not far behind at 54% and Baby Boomers at 42%. However, currently only 17% of Millennials, 7% of Gen Xers and 3% of Baby Boomers are participating in ESG investing.

Constantine Mulligan, partner and director of investments for the Retirement Plan Services Group at Cerity Partners in Chicago, tells PLANSPONSOR, “ESG investment options have been a common topic broadly discussed among plan sponsors in an exploratory manner more recently, but have generally seen minimal uptake amongst plan participants. For plan sponsors that do offer ESG funds, we typically have seen low adoption by participants, with less than 10% allocating assets to the strategy. While ESG investing seems to make sense in theory given the evolving awareness and consideration to social impacts, overall participant adoption remains low.”

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