Last year, ESG funds attracted record net flows attracting nearly $5.5 billion in net new money, to $161 billion. Interest is strongest among millennial investors.
Shifting guidance from the U.S. Department of Labor on where ESG fits from a fiduciary perspective has largely kept these options out of workplace retirement plans. An April 2018 statement from the SEC meant to clarify its position just made for more confusion among plan sponsors. “It’s murky right now,” says Fielding. But Fielding thinks it is still early days for educating advisors on ESG, and even earlier for educating plan sponsors. “Advisors focused on retirement still need to be educated that they don’t need to give up performance to invest in this way,” she says. “There also are challenges with record-keepers in terms of what it can take to add a new menu choice.”