As people become more interested in socially responsible investing, it’s having an impact—not just on social causes, but on how employees feel about their employers.
That’s according to new research from Calvert Investments, which offers mutual funds that invest in socially and environmentally responsible companies.
The study found that plan participants whose workplace retirement plans offer SRI options are “significantly more likely to express high satisfaction with their plan.”
While 45 percent of participants are “satisfied” and 50 percent are “highly satisfied” with the plan their employer provides, that percentage rises if SRI is a factor.
Sixty-six percent of participants in plans offering SRI as an option said they were “highly satisfied,” compared with just 44 percent of those whose employers didn’t provide SRI in the plan.
In addition, 78 percent of participants said they wished they had a greater understanding of the companies they invest in within their plan.
They’re also considerably more likely to opt for SRI once they know what it is—particularly younger people.
While 72 percent overall said they “definitely” or “probably” would consider SRI in the next 12 months, based on their experience or what they know about it, 81 percent of millennials opted for it, compared with 72 percent of Gen Xers and 63 percent of baby boomers.
They’re also willing to sacrifice some short-term gain (85 percent) for the chance of having better long-term results with their investments—and even to pay more (54 percent) for the privilege.
Interestingly, women care more about SRI than men. Among those who “strongly agreed” that they’d have greater peace of mind knowing their retirement money was invested responsibly, 54 percent of women said so, while 50 percent of men did.
And among those who “strongly agreed” that they didn’t care about SRI but were focused on risk/return, 36 percent were men while 31 percent were women.
Employers might find it interesting to know that a new tool allows investors to screen mutual funds for fossil fuels—a frequent hot button for those who care about SRI.
Using Morningstar data, shareholder advocacy nonprofit As You Sow has launched FossilFreeFunds.org, in collaboration with Fossil Free Indexes (The Carbon Underground 200,) the Carbon Tracker Initiative, BrightScope, and HIP investor.
The free tool allows consumers, including plan participants, to find fossil fuel holdings in 1,500 of the most-held mutual funds. According to As You Sow, “The five major fund families including Fidelity, Vanguard, and TIAA-CREF that control recordkeeping at 75 percent of all employer-sponsored retirement plans … do not offer any socially responsibly diversified mutual funds that are free of the 200 largest fossil fuel companies with the most oil, gas, and coal reserves.”
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