During a PLANSPONSOR webcast, John Hale, portfolio construction adviser of the ESG Managers Portfolios for Morningstar Associates, explored the background of and interest in sustainable investing.
According to Hale, sustainable investing integrates environmental, social and governance (ESG) factors into investment analysis and decision-making.
In the past, Hale said, sustainable investing, also known as socially responsible investing (SRI), was an investment concept that was values based. During the 1970s investors who wanted their portfolios lined up with social values found SRI important. SRI was primarily dominated by nonprofits and religious institutions.
According to Hale, plan sponsors are interested in sustainable investing because they want to better align their retirement plans with their organizational mission. They also want to provide their plan participants with more choices.