PRESS & RESEARCH
Unlocking the Power of Retirement Plans for Climate Action
SEPTEMBER 25, 2022
In this op-ed, Impact Experience’s Yejide Olutosin and Jenna Nicholas discuss a recently published opinion letter providing a legally defensible framework for evaluating ESG factors in employer-sponsored retirement plans.
Business for Climate Finance Publishes First of its kind report looking at CARBON emissions in 401(k) plans
SEPTEMBER 20, 2022
Today, the Business for Climate Finance Initiative, in conjunction with the CFA Institute, announced the release of its new report analyzing carbon emissions of corporate defined contribution (DC) retirement plans. Over $10.5 trillion* in assets are held in DC plans across the United States. Where and how this capital is allocated can play an instrumental role in financing or decarbonizing our current fossil-fuel-based economy. However, corporate climate pledges and actions rarely consider carbon emission metrics in retirement plans. This report is intended to help corporate plan sponsors understand and contextualize carbon emissions and carbon intensity associated with 401(k) plans. Measuring, assessing, and monitoring carbon emissions can contribute to a more holistic understanding of a company’s overall carbon footprint and identify potential material climate risks and opportunities embedded in DC plan options.
“Fiduciaries are charged with creating long term value for their end investors and therefore they must consider ESG strategies. There is a powerful opportunity here to unlock trillions of dollars that may be invested in a more socially responsible way, whilst not missing out on financial returns. We hope the findings of this report will enable us to engage around collective action to accelerate the shift to alignment of retirement accounts with climate priorities” – commented Jenna Nicholas, CEO of Impact Experience
“As clients clamor for more sustainable approaches to investing, it is important for financial analysts to assess the risks and opportunities stemming from climate change. This report illuminates how analysts can dig deeper into the impact of corporations on the environment and highlights the need for standardization of corporate disclosures and higher levels of assurance on those disclosures, so these factors can be fully incorporated into market prices. Ultimately, careful consideration of climate and environmental factors by financial professionals can improve the fundamental analysis they undertake and the value they provide to clients and society,” commented Andres Vinelli, Chief Economist at CFA Institute.
ABOUT BUSINESS FOR CLIMATE FINANCE
Impact Experience builds bridges and deep relationships between partners and communities to shift capital markets toward more equitable practices. Impact Experience is incubating the Business for Climate Finance Initiative. The Business for Climate Finance Initiative was launched with two goals in mind: 1) assess and disclose the climate impact of corporate cash deposits and retirement funds and 2) decarbonize bank accounts and employee retirement plans, starting with a group of leading US companies. Through research and convenings, the Initiative will help support communities of practice among companies who will be working toward these goals applying a unique Justice, Equity, Diversity and Inclusion lens. For more information on this initiative, see www.businessclimatefinance.org or follow Impact Experience on LinkedIn, Twitter and Instagram.
ABOUT CFA INSTITUTE
CFA Institute is the global association of investment professionals that sets the standard for professional excellence and credentials. The organization is a champion of ethical behavior in investment markets and a respected source of knowledge in the global financial community. Our aim is to create an environment where investors’ interests come first, markets function at their best, and economies grow. There are more than 190,000 CFA® charterholders worldwide in more than 160 markets. CFA Institute has nine offices worldwide, and there are 160 local societies. For more information, visit www.cfainstitute.org or follow us on Linkedin and Twitter at @CFAInstitute.
* Investment Company Institute. (2022, June 16). Quarterly Retirement Market Data, First Quarter 2022.
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