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ESG Investing Nonprofit

ESG Investing Can Help Your Nonprofit Find Talent

Can a commitment to strong ESG investing (environmental, social, and governance) within your retirement plan investments help attract and retain talented employees in your nonprofit organization? 

It matters more than you might think. 

End Homelessness, a regional nonprofit organization, was founded a decade ago by Catherine and John Howard. Their mission is to aid homeless and low-income individuals and families to find and keep housing. Catherine and John harnessed the power of their community and leveraged a lifetime’s worth of contacts to help them launch and complete many successful projects and initiatives. Over a ten-year period, the organization has grown considerably, expanding into neighboring counties, and now has more than 40 employees.

From the beginning, the couple, now in their 60s, were committed to making their organization as sustainable as possible. They teamed up with other businesses in their office complex to launch a carpooling program. In addition, they installed water- and energy-saving smart devices in their office as conservation measures. They have a robust recycling program and encourage employees to bring their own water bottles and coffee mugs to the office. Each month, they hold a contest among employees to generate new ideas to contribute to sustainability. Their employees are committed to sustainability as a core value of the organization. 

End Homelessness has been launching an ambitious future growth plan that includes building and running its first residential facility for homeless people. With approvals and funding secured, the project is poised to break ground. Josh Horwitz is a 32-year-old project manager whom they’ve hired to oversee construction and operations. If this pilot project is successful, End Homelessness will begin plans to roll out the solution to other regions. Catherine and John believe that Josh will be integral to the future of the organization and their legacy. 

Walking the talk in investments

Each August, the couple closes the company doors for an afternoon for End Homelessness’s Employee Day, when they review the health insurance, 401(k), and other benefits and perks the company offers. They noticed Josh’s look of concern as he flipped through the information packet on the company’s 401(k) plan. John asked him if there was something wrong and Josh pointed to the list of “top holdings” of the mutual funds in which the plan was invested. 

Josh explained that he had concerns about many of the companies there. One company was responsible for a massive chemical spill in the western United States. Another company had several high-profile sexual harassment scandals and had a reputation for sexist practices among senior management. It didn’t seem right to support those practices with his retirement investments, he said. Despite many offers, he had joined End Homelessness, in large part, because of its values-based and sustainable culture. Couldn’t the company apply those same thoughtful practices to their investment options within the retirement plan? Could they align those values, which employees all felt so compassionate about, with their investments? 

Josh’s questions are at the foundation of one of the most exciting trends in the world of investment markets—values-based investing. The field of ESG—environmental, social, and governance—investing does just that, allowing investors to focus their investment dollars on those companies that are acting as good corporate citizens through their environmental footprint, social policies, and corporate governance practices.

Bringing ESG investing to retirement planning for a nonprofit

While ESG investing has emerged as a growing trend among thoughtful citizens investing on their own, it has not yet been widely employed within qualified retirement plans. Recently, forward-thinking employers, in the for-profit and nonprofit areas, have begun to incorporate the concept within their retirement plans in an effort to attract and retain employees who want to invest according to their values. 

A recent study from Natixis* found compelling support for the inclusion of ESG options within company retirement plans; roughly three-quarters of all investors globally desire to invest in companies that reflect their personal values, 67 percent of those with access to a plan who do not participate say they would start contributing, and six in 10 participants say they would increase their current contribution rate if they knew their investments were doing social good.

These early adopters are leading the way in enhancing the benefits they offer to current and potential employees and are empowering their employees with the tools to feel good about their investments. As stewards of our clients’ investment assets as well as their financial well-being, RegentAtlantic works with employers and nonprofit organizations to offer ESG investing to companies and the employees that demand them.

End Homelessness is a fictional name for the purpose of this article. Any resemblance or similarity is unintended and coincidence. 

*ESG in 401(k) Plans: From “Nice to Have” to Fiduciary Obligation

Important disclosure information

Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by RegentAtlantic Capital, LLC (“RegentAtlantic”) will be profitable.

Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request.

This article is not a substitute for personalized advice from RegentAtlantic. This article is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

RegentAtlantic does not provide legal or tax advice. Please consult with a legal and or tax professional of your choosing prior to implementing any of the strategies discussed in this article.

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