The Continually Evolving Role of ESG in Retirement Plan Investments

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Senior Consultant Frank Szymanek’s latest article in Benefits Quarterly explores the continually evolving role of ESG in retirement plan investments. 

The topic of environmental, social and governance (ESG) investing is a key focus for institutional investors. This particularly applies to retirement plans, where fiduciaries have an obligation to oversee the goals and strategies of the investment options offered to plan participants. ESG investing also plays a key component in other asset pools, such as endowments and foundations.

In October of this year, the U.S. Department of Labor (DOL) announced a proposed rule that would remove barriers to retirement plan fiduciaries’ ability to consider climate change and other ESG factors when they select investments and exercise shareholder / proxy voting rights. The principal idea is that climate change and other ESG factors can be financially material and when they are, considering them will inevitably lead to better long-term risk-adjusted returns, protecting the retirement savings of America’s workers. It also states that there appears to be no reason to foreclose plan fiduciaries from considering the fund as the qualified default investment option (QDIA) in a plan.

In his article for the most recent edition of Benefits Quarterly, our new Senior Consultant Frank Szymanek discussed the regulatory history and current state of ESG investing, making the case that ESG is becoming integrated into the asset management process of many managers such that it can hardly be avoided.

Click the button below to read Frank’s article.

ESG Investments

ESG investing is typically defined, implemented and overseen by a retirement plan advisor / consultant, and by an OCIO provider for other assets. The oversight of these managers is a key fiduciary responsibility. At North Pier, we support our clients by providing due diligence services that include search and evaluation of these investment advisors and OCIO providers (we are not an advisor or OCIO ourselves, thus maintaining objectivity).

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