A new survey by NEPC, an investment consulting firm, finds that 88% of corporate defined benefit and defined contribution plan sponsors have not incorporated environmental, social and governance investing into their plans.
However, 29% of survey respondents said they were interested in doing so.
The poll found that among sponsors that have incorporated ESG, 70% were defined contribution plans, and 62% of these were health care focused organizations.
NEPC’s corporate and health care practices conducted the online survey in June among 69 respondents that offered 119 plans. Sixty-five percent of respondents were corporations, and 35% were health care institutions.
“The survey findings solidify our belief that institutional investors can capitalize on opportunities created by ESG as long as it makes sense for them,” Brad Smith, partner in NEPC’s corporate practice, said in a statement.
“Right now, for example, a big focus for DB plans is closing funding gaps, and while ESG may reduce risk over time, these plan sponsors often prioritize purely financial factors versus sustainability to drive excess returns.”
Smith said it made sense that health care would adopt ESG at a higher rate than its corporate counterparts because of the nature of the industry and the fact that a large proportion of those organizations are either mission-driven or faith-based.
“Many health care organizations have historically included a socially responsible investment option within their DC plan, which is likely the reason why the survey findings show more ESG adoption by DC plans than other plan types,” he said.
Ninety-four percent of the defined benefit plans surveyed were not incorporating ESG at present, though 28% said they may do so in the future.