Climate-Aligned Retirement Plans
More than 140 million workers in the U.S. prepare for their retirement through 401(k) investment plans. With nearly $8 trillion in assets under management, these plans are a crucial vehicle for employees to prepare for retirement. They also offer tremendous potential for employees to align their values with their investments.
The rapid growth of ESG investing is evidence of Wall Street’s heightened awareness of climate-related risks. Yet when it comes to employer-sponsored retirement funds, fewer than 3% of 401(k) plans offered actually include climate-aligned investment options.
A critical change on the horizon for retirement funds
A new proposal by the U.S. Department of Labor would enable fiduciaries to consider climate and other ESG factors when choosing retirement plans. Here’s what this critical change means:
- For companies: adoption of the proposed rule would help align corporate benefits with growing employee demand for sustainable investing. Nearly 75% of employees at Fortune 1000 companies believe that having socially responsible investment options in their 401(k) plans is important. Making retirement savings accounts more responsive to employee demands can help – but action is needed.
- For financial advisors: there is an opportunity to better incorporate climate and other environmental factors into their analyses, while also reflecting the values and desires of a growing number of investors.
- For climate-aware investors (employees) in 401(k)and ERISA plans: the change would provide more flexibility to achieve their financial goals while supporting the future they want to retire into.
Employers and employees should file a comment with the Department of Labor by December 13, 2021 in support of the proposed rule.
- DOL Comment File (60-days. Issued Oct 13, Due Dec 13, 2021)
- Notice of Proposed Rulemaking on Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights (109 pages)
- DOL Factsheet (5 pages)
- Sign the EDF Petition
- Ceres Department of Labor Landing Page
- Media Coverage
- 7-min presentation and slides
- Register here for a webinar, Wednesday, November 17 at 3:00 PM EST:
Sustainable Investing Options for 140 Million Americans
Hear directly from the U.S. Department of Labor’s Acting Assistant Secretary Ali Khawar, the American Retirement Association, investment industry leaders, and a plan sponsor.