SURVEY SAYS: How Does Your Plan Stand on SRI?

This week I asked readers about the SRI status of their current investment menu.

Nearly two-thirds ( 62.7% ) of this week’s respondents said they have never even talked about an SRI option, and just 13.2% said they already had one on the menu (although one said, “Just added two Funds in April…hopefully there will be more” ).  

As for the future, none of this week’s respondents indicated that an SRI option would be added this year, and none said it would be coming “one day.”   Roughly 8% said they have talked about it (one reader said, “We will talk about it now…” ) – but twice as many said they would NEVER talk about it.  

Among this week’s responses were the following observations:

• “No one has ever asked for an SRI; we offer only 10 investment options, figuring that the fewer the better for employees to choose from.”
• “SRI has not been a topic discussed and I hope it never is. I hope education keeps people away from politically motivated investments. The goal is long-term investments that make sense.”
• “Who defines what is ‘socially responsive’? Whose definition are we to use, and what if it conflicts with mine? Where is that line between socially responsive and not, and who determines it? This is not a black-and-white issu, but is a continuing spectrum, and I dislike trying to legislate or have legislated for me what I and my employer should consider as acceptable funds according to someone’s definition of ‘socially responsive.'”
• “I think reducing by half (or more) the companies you can invest in is a poor way to invest. By the time you cut out companies in defense, liquor, tobacco, gambling, stock option errors, investments in Sudan, possible unfair labor practices etc, which companies are left to invest in? If anything, I’d recommend adding a Vice fund before a SR fund.”
• “SRIs are inherently difficult to define. Just because some fund calls itself an SRI doesn’t mean it really is one. We are an environmental consulting firm, and for us, the selection of an SRI is doubly difficult because our employees, more than most, actually understand the term as a scientific issue, not just as the political flavor of the month.”

In the remaining fraction that opted for “other,” most said that participants had access to an SRI option, but generally only through vehicles like self-directed brokerage accounts.  

“We settled on what I think is best for the plans:   No SRI funds among the plan’s core offerings.   Because each person has different values, it is impossible to determine the parameters for ‘socially responsible.’   We determined it ‘socially responsible’ to pick the funds that will provide the highest rates of return in each asset class as the plan’s core offerings (which likely will not be in SRI funds due to their VERY high management fees).   If none of these core choices are reasonable, the participants can choose to their liking from the self-directed option.”

We did ask those who currently offered an SRI option how participants had responded – and, for the most part, it seems not to be very widely used.    Roughly a third said they “love it, but don’t use it,” while roughly one in five said that they don’t seem to notice.   Another third said they weren’t sure what the take-up rate was, and the remaining 14% opted for other – mostly noting that while participants asked about it, they didn’t seem to actually care about it.  However, one reader noted, ” In the last 6 months I’ve had more new hires asking if we have a SRI. I don’t know that it’s changed their enrollment or investment behavior, but at least their asking!”

But this week’s Editor’s Choice goes to the reader who observed, “We consider getting employees into an appropriate allocation so they have a decent chance to retire with dignity to be the last word in socially responsible investing.”

Thanks to everyone who participated in our survey!

We have already talked about it at our investment committee meetings (d).   We settled on what I think is best for the plans:   No SRI funds among the plan's core offerings.   Because each person has different values it is impossible to determine the parameters for 'socially responsible'.   We determined it 'socially responsible' to pick the funds that will provide the highest rates of return in each asset class as the plan's core offerings (which likely will not be in SRI funds due to their VERY high management fees).   If none of these core choices are reasonable the participants can choose to their liking from the self-directed option.  

P.s.   Note the quotes around socially responsible.   This is not an accident; this whole business buzz word hype of 'going green' and 'socially responsible' is just about making me sick.   In my local neighborhood paper a business printed an article about their 'going green' because they recycled a bunch of building materials.   That's great, but they failed to mention the materials were taken from old buildings removed so they pave a whole block for a surface parking lot!   Good spin, but not exactly 'going green'.   Just talking about this causes my blood to boil!   I'd better stop now before I start talking natural resource economics . . . .

No SRI offerings in our 401k. But we have a brokerage account option, so anyone who's hard-core about it can use that & do any number of things.