For Employees: The Model
"Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has."
- Margaret Mead
We've worked at large companies, and know how challenging it can be to disrupt the status quo - even when a better alternative seems obvious. Change requires knowing the facts, getting smart on your business case, and rallying a critical mass of support. We take a three step approach to training and equipping individuals to advocate for responsible investing options. First, we identify and inform passionate individuals who have self-selected to be responsible investing leaders at their companies. Next, we train and equip them by helping them first garner support from like-minded employees. Finally, we support them throughout the engagement process with leadership and provide ongoing support and resources.
Identify & Inform
Increasingly, more and more everyday individuals are recognizing the desire to align their finances and their values - particularly when it comes to their long term investments. But most employees don't know how and who to ask for these options. αlign helps to identify changemakers within companies that are excited to organize their co-workers around sustainable investing options. We first focus on you - the individual change agent - helping you to learn more about sustainable investing and retirement options.
Train & Equip
Once you feel comfortable understanding the basics of responsible investing, we help you start to bring the conversation into your workplace. No one company is the same in terms of culture, organizational design, and decision making process, so we help you find the strategy that works best for your environment. We provide templates that you can use to help educate and catalyze colleagues, from sample emails, to key talking points, and even ideas for events.
Finally, we help support you in developing your pitch to company leadership. This may be done in tandem with raising awareness among colleagues. As a support engine, we can answer questions and provide input on how to develop a business case, and communicate effectively. Remember, αlign doesn't manage any financial assets, or offer advice on which financial products to invest in - rather, we focus on explaining the costs, benefits and policies associated with sustainable investing.
For Companies: The Business Case
For most large companies, providing 401k options for employees is a standard process – maybe some period of vesting and then some percentage of matching – incentivizing employees to save for their future, while also providing additional compensation. But in 2015, government regulators changed the game when they approved the use of Environmental, Social and Governance issues (commonly referred to as “ESG”) by ERISA plan fiduciaries (as in – the people at your company that select your retirement investment options). In fact, the Department of Labor released a statement where it, “acknowledges that environmental, social, and governance factors may have a direct relationship to the economic and financial value of an investment,” a significant turnaround from previous language which discouraged consideration of ESG factors. This new guidance opens the door for companies to begin to offer retirement investment options that align with employees' values as well as their financial goals. These could include Socially Responsible Investment Funds, which are investment vehicles that actively view a company’s performance on ESG metrics, and either avoid companies that perform poorly in this area, or actively focus on companies that perform well – all without influencing the financial performance of the vehicle.
Why should companies care? Here are four reasons your investment committee should add socially responsible investment options to its benefits package, and in doing so, create the next big “employee perk":
Availability of ESG-screen funds can enable individuals to make better decisions about their investment options. Investing in responsible companies does not detract from our returns – this paper looks at 2,000 empirical studies and several review studies to study the correlation between ESG and performance. This study from Harvard and Calvert shows how ESG data may be able to help portfolio returns without adding additional risk. Providing these options for employees, means providing them with better, more holistic ways to save for retirement.
If your company is serious about improving diversity, and retaining millennial talent, then it needs to prepare for a workforce that has a different outlook on its investment strategy.Women, minorities, and millennials are more likely to consider ESG as an important factor in their investment strategy (see this article from Calvert). Simply put, companies need to provide the type of investment vehicles that the “workforce of the future” will demand. As these employees look for companies that match their values, they will also look for companies that allow them to invest their earnings in products that match their values.
You can't hold your investors to different standards than you hold yourself. As a company, chances are you’ve made some commitment to the community you work in – either through your environmental standards, community service activities, or hiring practices. Your company may expect outside investors to understand the materiality of its ESG efforts, and fault these investors for emphasizing only short-term gains over long-term value and sustainability – isn’t it time to look internally and align your company’s own investing perspective with the perspective you hope investors approach your business with?
Together companies have way more power to change the system than individually. If companies incorporate ESG into their investment making decisions, and if they provides more options for highly rated ESG funds, they can make a signal to the rest of the market about responsible business. When companies, which channel billions of dollars in employee investments and matching contributions, demand change, the market is more apt to listen and respond.