By Dominic Jones
WHILE only one in five American defined contribution (DC) pension plans currently offers a socially responsible investment (SRI) option, 60% will do so within three years.
This is according to new research released by the Social Investment Forum, which commissioned Mercer Investment Consulting and PLANSPONSOR magazine to conduct surveys with plan sponsors, administrators and consultants.
The survey found that 19% of DC plans already have a SRI option and that 41% of plan sponsors not currently offering one expect to be doing so within three years. That translates to 60% penetration for SRI options in DC plans by 2010.
Meanwhile, 81% of plan administrators, 72% consultants, and 47% of plan sponsors expect increasing or steady demand for SRI over the next five years. That will be driven mainly by companies wanting to align their retirement plan offerings with their own focus on corporate social responsibility, internal staff recommendations, and employee requests for SRI options.
From an investor relations perspective, these findings are just further confirmation of the gradual mainstreaming of SRI.
And with that will hopefully come a new and better way of communicating csr/sustainability information to investors. Because the current approach, where companies are producing thick GRI-based sustainability reports, makes little sense except if you’re making money from the report production or analysis process.
Think about it. Who except consultants and a small group of analysts is reading sustainability reports? People barely have time to read financial reports, proxy statements or even product brochures. There is a better way, and a few companies are onto it.
See SRI & DC plans in the US from Mercer. The full survey results and resource guide are available online (PDF 722 KB, 56 pages) from the Social Investment Forum.
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