110 million employees in the United States have over 8.4 billion collective dollars invested in employer-sponsored retirement plans. In order to attract top millennial and Gen Z talent, many organizations have made a push in recent years to outwardly embrace the causes their employee bases are most passionate about. Lately, however, many have been pointing out a growing disconnect between their employers’ stated values and the assets in their company stock portfolios.
Now more than ever, employees (especially younger ones) are personally invested in a number of social, economic, and environmental causes ranging from climate change to gender and racial equality. 401(k) plans, on the other hand, don’t quite seem to be keeping up. Despite the major cultural strides that have been made over the last several years, many 401(k) plans are still heavily invested in firms that are not progressive on the issues today’s employees value the most.
Today, we’ll address how companies can work to bridge the gap between their current investment portfolios and ones that are better aligned with their employees’ nearest values.
1. Get familiar with your investments
The first step in your journey is one of the simplest: understand what your plan is currently invested in. Thanks to investment rating tools such as As You Sow, it is now easier than ever to get familiar with your company’s investment choices and where they stand on a number of pressing issues including fossil fuels, gender equality, prison, and tobacco. The tool allows you to enter the ticker symbol of any mutual fund, ETF (exchange-traded fund), or 401(k) plan and then provides a convenient letter rating for the fund’s impact on the issues you choose, giving you an at-a-glance understanding of the impact of your current investment portfolio. You can also ask your Plan Advisor for help with this. Equipped with this knowledge, you’ll be much better prepared to decide if your current investments are aligned with your company values or if it’s time to make a change.
2. Explore your options
Now that you’ve gained some perspective on your existing portfolio, you can begin to assess how well it’s meeting your financial and company objectives. You may find that it’s already a perfect match. However, if that isn’t the case, you can also use As You Sow to explore alternative mutual fund options that may be a better fit. The tool helps you streamline your selection process by browsing funds by issue, so you can easily access lists of funds that are fossil-free, tobacco-free, prison-free, or committed to gender or racial equality, for example. A trusted employer retirement plan advisor, like The Segrust Group, is also an invaluable resource for exploring your options. Spend some time looking over all of the mutual funds in your plan and see which ones make the cut on the issues of your choice. Once you’ve chosen the funds you feel good about, speak to your plan advisor about reallocating the dollars you currently have invested into the new assets you’ve chosen.
3. Communicate
The next step will be to spread the word about your new offerings to the people who will appreciate them the most: your current and future employees. Knowing which funds you selected and why you chose them will help your workforce feel more connected to your firm and the values it upholds. Now that you have taken the steps necessary to invest in socially and environmentally conscious companies, you can demonstrate that you not only talk about the causes that are important to you, but you actively support them with your company dollars.
Your retirement plan can do a lot more than just prepare your employees for financial security. Each dollar that you invest is also an opportunity to advance a cause you and your employee base are most passionate about, whether it’s racial equality, environmental health, or prison reform. With the help of tools like As You Sow, you can build a well-rounded portfolio by investing in funds that match both your financial goals and your conscience. If you have any questions or want help evaluating whether your current plan meets your needs, contact us to assist you with reviewing potential investment options and determining which ones are right for your organization.