{"id":7451,"date":"2020-11-17T12:24:47","date_gmt":"2020-11-17T17:24:47","guid":{"rendered":"https:\/\/rixtrema.com\/blog\/?p=7451"},"modified":"2020-11-17T12:42:44","modified_gmt":"2020-11-17T17:42:44","slug":"its-official-esg-is-inevitable","status":"publish","type":"post","link":"https:\/\/rixtrema.com\/blog\/its-official-esg-is-inevitable\/","title":{"rendered":"It\u2019s Official. ESG is Inevitable."},"content":{"rendered":"\n
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  1. A New Trend<\/a><\/strong><\/li>
  2. A Tough Breed<\/a><\/strong><\/li>
  3. An Influenced Risk<\/a><\/strong><\/li><\/ol>\n<\/div>\n\n\n\n
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    It wasn\u2019t so long ago that we heard about the new ESG rule by DOL and in our follow-up commentary we spread the word about it in the (following article link)<\/span><\/p>\n

    How the DOL\u2019s New ESG Rule Will Affect Retirement Advisors<\/a><\/span><\/a><\/p>\n

    \u00a0<\/p>\n

    A New Trend<\/b><\/h2>\n

    \u00a0<\/p>\n

    Environmental, Social, and Governance is the hot new thing this year. Investors are increasingly applying these non-financial factors in their analysis to identify material risks and growth opportunities. Net flows to long-term responsible funds quadrupled in 2019 to $20 billion, from $5 billion in 2018, and continued to grow during the first half of 2020 to reach $21 billion. 68% of environmental, social, and governance assets in the U.S. are now in actively managed funds. Flows into ESG active equity funds during the 12 months preceding August, accounted for 10% of the average fund assets in the U.S, according to<\/span> a report by Broadridge Financial Solutions.<\/span><\/a><\/p>\n

    Company-sponsored retirement plans have responded to the demand by adding these offerings. But the DOL\u2019s rule stops short of including ESG in retirement funds, by requiring plan fiduciaries to select investments and strategies based solely on how they will affect the plan\u2019s financial performance or pecuniary goals. It is, in some ways, a microcosm of the growing social and political divide in America. The DOL explains that fiduciaries should not sacrifice returns, increase risks, or raise the cost of a plan to pursue non-pecuniary objectives.<\/span><\/p>\n

    There is not a standardized approach to the calculation or presentation of different ESG metrics. Plan sponsors and plan advisors can employ a variety of analytical approaches and data sources to address ESG considerations. Understanding the relative merits and limitations of different metrics can help form a more complete picture of ESG risks and opportunities.<\/span><\/p>\n