ESG investing, where an investor considers the ESG impacts of their holdings, appeals to an ever-broadening audience. This kind of impact investing is especially appealing to Millennials, where an estimated 90% say they want their assets and employer to reflect their social values, yet few employers offer ESG investment options within their 401(k), 403(b) and 457 retirement plans, ClearPoint says.
The market for sustainable, responsible, and impact investments reached $8.7 trillion in 2016, however, it’s estimated it accounts for less than 1% of the $7.7 trillion U.S. defined contribution (DC) retirement market. One reason for such a small allocation to investments with a positive social impact is likely because 70% of employers use target-date funds (TDFs) as the default investment option for their retirement plans, yet ESG versions of these portfolios are virtually nonexistent, according to ClearPoint.
“It’s time to give would-be impact investors the investment options they’ve been looking for,” says Mike Grimme, managing partner of ClearPoint Financial Partners. “ESG target-date portfolios give both employees and employers a way to connect on common values.”
ClearPoint Financial Partners, LLC is working with Pasadena-based Whittier Trust to provide ESG analysis on the underlying funds within the portfolios.
“Whittier has been working with our clients for years on implementing ESG strategies in their portfolios and we are excited to bring our expertise to the retirement plan market in partnership with Clearpoint Financial Partners, LLC,” says Craig Ayers, senior vice president of Whittier Trust.