Is the playing field tilting further in favor of ESG investing in DC plans?

(Photo: Mike Scarcella/ALM Media)

Defined contribution (DC) plan participants are hungry for environmental, social and governance (ESG) investment options. Just over two-thirds of plan sponsors say participants want more ESG choices in plan menus, according to AB’s long-running Inside the Minds of Plan Sponsors survey. And 66% of sponsors view integrating ESG factors in fundamental investment analysis as a fiduciary duty.

But many plan sponsors still struggle to determine the best way to deliver ESG choices to investors, with a shifting regulatory environment and a slew of new products adding an element of uncertainty. In our survey, 42% of plan sponsors cited the biggest obstacle as telling the difference between individual ESG funds, integration, industry screens, asset-allocation sleeves, target-date funds and other options.