2022 US RETIREMENT SURVEY – SHROADERS
ESG findings from the Schroders 2022 US Retirement Survey Investors in defined contribution (DC) plans want their investments aligned with their values. So much so, that when they have ESG investment options in their plan, participants may actually increase their overall plan contribution rate – making ESG investments a potential catalyst for greater retirement savings and improved retirement readiness.
This year, even more participants are telling us that ESG may be a catalyst to save more for retirement. This is a compelling reason for plan sponsors to consider adding ESG options to their line-up, as ESG could become a significant factor in improving participant retirement readiness and a consideration of ESG factors offers the opportunity to maximize risk-adjusted returns for participants.Deb Boyden Head of US Defined Contribution, Schroders
The 2022 Schroders US Retirement Survey found that almost 9 out of 10 (87%) DC plan participants surveyed report they want their investments to be aligned with their values.
Are they using the ESG options they have?
Unfortunately, ESG options in DC plans are not widespread; but according to the Schroders survey, the vast majority of those who say they have ESG options, use them. More specifically, of the 31% of 401k plan participants surveyed 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.
This year, more participants say ESG options in 401k plans could improve their savings rates
Having ESG investment options that align with their values in their 401k may produce an unexpected benefit: greater retirement savings. Last year, Schroders discovered that 69% of plan participants who lacked or didn’t know if they have ESG investment options in their plan would or might increase their overall contribution rate if offered ESG options. This year even more – 74% of respondents – said they would or might contribute more when given ESG options.
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%
Another hidden benefit: Positive views about employer
When employers make ESG options available in their 401k plans, it can have another overlooked, positive impact: A significant percentage of investors (40%) report that having the ability to invest in ESG options in their 401k plan would improve how they view their employer.