Background:

DCIIA Retirement Research Center Private Label, AARP Public Policy Institute and Natixis Investment Managers recently completed a syndicated study of more than 3,000 defined contribution (DC) participants’ attitudes towards, awareness of, and demand for sustainable investment options in their DC plan. The results of the study along with related research were discussed in a webinar on June 25 – the replay of the webinar is available to all here.

This week’s Research Minute, part two of the series, will dive deeper into the study’s findings. As outlined in part one, three unique segments emerged from the analysis: impact investing receptive, investment fundamentals, and leadership matters. This study also explored participants’ awareness and understanding of “ESG” and “sustainable” investing, emotional reactions to these concepts, and impressions of sustainable investments’ market performance.

Findings:

1. Awareness and understanding: The terms “sustainable investing,” “ESG investing,” and “environmental, social and governance investing” have strong awareness, but not particularly strong understanding.

2. Emotional reactions: Results showed that there is very little negative energy related to the terms “sustainable investing,” “ESG investing,” and “environmental, social and governance investing.” There appears to be more positive than negative energy attached to these terms.

3. Perceptions of market performance: The perception that sustainable investments have below-market-norm performance is not widely held by DC participants. Participants’ strongest perception is there is no systemic difference in performance versus market norms. The percent “above market norms” and “below market norms” were quite small and tended to offset each other.

Bottom line:

This study provides insight into participants’ views of sustainable investing, which is largely neutral. It also suggests that to unlock participant demand for sustainable investing, the industry needs to come up with better, more clear and descriptive terminology.

Find the replay and presentation deck from yesterday's related Sustainable Investment Insights webinar here.

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