By 2010, 60 percent of
defined contribution plans will offer a socially responsible investment (SRI) option,
according to a study released this past summer by Mercer Investment Consulting,
a global provider of HR and related financial advice and services, in
conjunction with the Social Investment Forum, a nonprofit organization that
promotes responsible investing. Nineteen percent of defined contribution plans
currently offer an SRI choice, and another 41 percent expect to by 2010, the
study found.
Lisa Woll, Social
Investment Forum CEO, predicts steadily increasing interest in SRI options in
the near future, and the report found that 81 percent of plan administrators,
72 percent of consultants, and 47 percent of plan sponsors agree. “Socially
responsible retirement options are becoming a fixture of corporate
retirement plans,” Woll says. “This is good news for investors and their
employers. More and more Americans are interested in SRI funds because they
offer a way to save for retirement, improve corporate responsibility, and
achieve significant environmental and social goals. Companies that offer them
are providing a real benefit to their employees.”
Tech Giant Says Offering
SRIs Makes Sense
Santa Clara-based Intel,
the $39 billion maker of computer chips, is one company that offers employees an
SRI fund option. According to Dave Stangis, Intel’s director of corporate
responsibility, SRI options are compatible with business goals.
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“As a company
continually striving to lead in socially responsible business practices, it
just made good business sense to have an option that allowed our employees to
put their money where their hearts are,” Stangis said. “Our employees are
diverse and have strong views on why it’s important for the company they work
for to be socially responsible. Part of meeting that expectation, now and in
the future, means having 401(k) investment choices that are broad and include SRI
options.”
Companies with a
business or corporate focus on environmental or social issues may be more
likely to add an SRI alternative to their existing investment choices. However,
Mercer Investment Consulting believes that companies across all sectors will
soon join the movement. “As institutional investors continue to consider
environmental, social, and governance issues within their investments and as
these issues retain their prominence in the news, Mercer IC also believes that
overall demand for socially responsible investment options by defined
contribution plan participants will grow,” the report says.
Healthcare and
government organizations are so far the employers most inclined to offer an SRI
option, according to the survey results. The survey also found that
misperceptions continue to exist among plan sponsors about the competitive
track record of SRI funds and fiduciary issues surrounding them. Consultants, advisers,
and fund companies need to play a vital role of educating plan sponsors and the
public, the Social Investment Forum says.
For More Information
Companies planning to
add an SRI alternative to their 401(k) plan should have certain information before
taking action. For example, should an SRI option be evaluated differently from
any other investment? The Social Investment Forum and Mercer Investment
Consulting have created a resource guide, available at www.socialinvest.org/pdf/research/Plan%20Sponsors%20-%20Resource%20Guide.pdf,
that will help answer plan sponsors’ questions.