Products July 6, 2022

Morgan Stanley Partnership Expands Access to Employee Stock Purchase Plans

A new collaboration with Carver Edison will provide Morgan Stanley at Work clients with technology to simplify and streamline the administrative work required to manage employee stock purchase plans.

 

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Morgan Stanley at Work has integrated financial technology for expanded access to employee stock purchase plans.

Specifically, Morgan Stanley has partnered with Carver Edison to incorporate the fintech’s application programming interface—software enabling applications to exchange data and functionality easily and securely—for plan sponsor clients and retirement plan participants.

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According to the firms, the collaboration with Carver Edison will provide Morgan Stanley at Work clients and retirement participants with the latest technology to simplify and streamline the administrative work required to manage ESPPs.

“Given our significant role in the FinTech and benefits space, we continuously look to forge relationships with innovative companies like Carver Edison to raise the bar when it comes to workplace wealth, offering game-changing technologies that translate into practical and useful solutions for our clients and their plan participants,” stated Scott Whatley, managing director and global head of equity Solutions at Morgan Stanley at Work, in a press release about the new partnership.

Whatley said the partnership aims to provide Morgan Stanley clients with greater access to ESPP data and to give retirement plan participants quicker access to discounted company shares, all without administrative delays. Employees using Carver Edison’s Cashless participation tool—allowing public companies to help employees maximize their ESPP contributions with limited payroll deductions—can access so-called financially inclusive ESPPs that can help otherwise underserved employees to own 50% to 150% more stock every six months.

According to the press release, Morgan Stanley partnered with Carver Edison to broaden ESSPs because of the belief that the products can bolster employees’ retirement preparedness by helping to build their net worth and supplement their cash flow. This is particularly important as prices for basic necessities such as groceries and gas continue to rise, the release says.

The Carver Edison API provides Morgan Stanley at Work clients and participants with an equity administration process that includes automatic transfers of account and purchase data for same-day share settlement. The shortened processing time for participants allows individuals to receive shares faster and at greater scale, according to the release.

Data & Research July 5, 2022

Pension Plans Among ESG’s Biggest Proponents

Major pension funds see sustainable investing as a fundamental element of investing rather than a potential drag on performance, according to a new Morningstar survey.

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Institutional asset owners’ stances on sustainable investing have changed over the years, and the current approach broadly embraces the use of environmental, social and governance investing principles.

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However, while ESG factors have become an investment touchstone for institutional asset owners, underlying data clarity and strategy implementation remain challenges, a new Morningstar Indexes and Sustainalytics survey found. According to the report, “Voice of the Asset Owner Survey,” pension funds today see sustainable investing as a fundamental element of investing, not some esoteric approach that could damage potential returns.

The qualitative survey found that ESG factors are seen as desirable objectives when used in a tiebreaker context, for example.

As part of the analysis, asset owners were asked to place their organizations on an ESG spectrum that was scored from zero to 12. Those at the bottom believe ESG considerations hamper returns. Moving higher, other organizations see ESG as a financial factor, while others even higher on the spectrum have explicit social or environmental goals. Finally, those organizations at the top said they would even be willing to give up some returns to achieve ESG objectives.

The results show that most respondents view ESG favorably, with many seeing it as a potentially useful financial factor at the very least.

“We heard almost unanimously from the AOs [asset owners] we interviewed that ESG is a critical part of their investment policy and day-to-day thinking,” the report states. “They know it is a very important topic, but they are not always sure how to address it.”

Respondents fell into the range between 3 and 10, with most at 6 or above, and several at 10, the report says.

“This implies that ESG factors are seen as desirable objectives when used in a tiebreaker context,” the report explains. “Those who placed themselves below 6 tended to cite fiduciary concerns as the reason.”

This group said ESG factors should be considered for investment decisions only when there are sufficient financial grounds for doing so.  

Asset owners’ varied ESG approaches were illustrated by their responses to different queries.

One skeptical asset owner, for example, shared the following statement: “We cannot go to pensioners and say, ‘Oh well, your pension’s going to be reduced, because we decided we needed to save the planet.’” Another emphasized that their organization does see ESG as a financial factor, but “not purely a financial factor.”

Asset owners are also asking for more tools, resources and data on ESG to inform their investment decisions, according to Morningstar.

“We need dashboards, and we need specialization,” another asset owner stated. “We just need these tools to be readymade and cookie cutter.”

Another asset owner stated that there is more demand “for raw, granular ESG data … so that people can combine it and use it how they please.”

The qualitative responses are the first phase of the “Voice of the Asset Owner” report. The qualitative responses will be incorporated into a broader, quantitative study covering a larger sample of asset owners, according to Morningstar. The qualitative section gathered responses from asset owners in March 2022 through in-depth interviews with five asset owners in North America and nine in Europe.

According to the survey, one side effect of an increased focus on ESG is lengthened time horizons.  

“If you go back five or six years, ESG wasn’t part of mainstream investing,” one asset owner stated. “That was a problem.”

Asset owners now view ESG as a core element of investing instead of a specialist niche, Morningstar found. Sustainable investing has transitioned from “nice to have” to a “must have,” according to the survey.

The survey also found that both client demand and investment conviction are driving ESG, with some evidence emerging to suggest the impacts of the COVID-19 pandemic have helped to accelerate an embrace of ESG principles.

Morningstar also found that, of the ESG factors considered by asset owners, climate is most prevalent, followed by biodiversity. Among social factors, the topic of diversity, equity and inclusion received the most mentions.

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