PLANADVISER - July/August 2022 - 15

Pension Plans Like ESG
Sustainable investing is now viewed as fundamental
INSTITUTIONAL ASSET OWNERS' stance
on sustainable investing has changed over
the years: The current approach broadly
embraces the use of environmental, social
and governance investing principles.
Yet, while ESG factors have become an
investment touchstone for institutional
asset owners, challenges such as strategy
implementation and poor data clarity
remain, a new Morningstar Indexes and
Sustainalytics survey found. According
to the report, " Voice of the Asset Owner, "
pension funds see a company's sustainability
as reflecting its worth as an investment,
not as some esoteric approach that
could damage potential returns.
Morningstar asked asset owners to
place their organizations on an ESG spectrum,
scored from 0 to 12. Choice of a low
number indicated the company felt ESG
considerations hamper returns. A number
in the middle meant the company saw ESG
as a financial factor, while higher numbers
suggested it has explicit social or environmental
goals. Finally, choosing a number
at the top indicated the company would be
willing to give up some returns to achieve
ESG objectives.
According to the results, most respondents
viewed ESG favorably, with many
seeing it as a potentially useful financial
factor at the least.
" We heard almost unanimously from
talking points
Young Investors Raid Their Savings
To Pay for School
Of the 49% of investors under age 34 who said
they've taken money from their 401(k) or individual
retirement account, 20% said it was to finance
education; 19% blamed a medical emergency.
Source: E*Trade from Morgan Stanley
the AOs [asset owners] we interviewed
that ESG is a critical part of their investment
policy and day-to-day thinking, " the
report says. " They know it is a very important
topic, but they are not always sure
how to address it. "
Respondents' ratings fell between 3
and 10, with most choosing 6 or above,
and several, 10, the report says, observing
that " those below 6 tended to cite fiduciary
concerns as the reason. "
" This implies that ESG factors are seen
as desirable objectives when used in a
tiebreaker context, " the report says.
According to the group, however, 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, the report
says. -Noah Zuss
➜ Utkarsh Patel will
move to Prudential
Financial Inc. as
global head of digital
products.
➜	PGIM Fixed Income
named Daleep
Singh as chief global
economist and head
of global macroeconomic
research.
➜ First Trust Capital
Partners LLC signed a
definitive agreement
to purchase Veriti
Management LLC, a
direct indexing asset
management and
financial technology
company.
➜ Mutual life insurer
New York Life
appointed Senior
Vice President Todd
Taylor as head of retail
annuities.
➜ As part of Voya
Financial Inc.'s planned
succession process,
the company's board
of directors appointed
Heather Lavallee as
president and CEOelect.
➜
NFP hired John
Stewart as senior vice
president, surety leader,
in Canada.
➜ The Standard hired
Mike Shamon as stable
value sales director.
planadviser.com July-August 2022 | 15
➜
http://www.planadviser.com
PLANADVISER - July/August 2022

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