Both the investment community and the corporate world are paying increased attention to environmental, social and corporate governance issues, thanks to a number of factors. These include changes to regulatory standards (especially related to climate change), new corporate disclosure guidelines and the growing number of investors committed to the U.N.-sponsored Principles for Responsible Investment.
Even so, we weren't surprised by some of the results of Mercer's recent global survey of defined contribution retirement plans, which encompassed plan sponsors from 33 different countries and received more than 1,500 responses. In this survey, we asked a number of questions to assess the extent to which ESG issues and corporate social responsibility strategies are influencing DC plan management.
The majority of survey respondents (55%, or 151 of 277 respondents for this particular question) indicated that they do not have, or are unaware of, a corporate social responsibility — or CSR — strategy within their corporation. However, as some additional research revealed to us, more than a third of those 151 respondents, most of them based in the U.S. and Canada, work for companies that do have global CSR strategies. This discrepancy suggests that CSR strategies are not being communicated effectively, which can mean that plan sponsor commitments to CSR might not be considered in DC plan management.
Indeed, the majority (71%) of survey respondents that have a global CSR strategy (whether they are aware of the strategy or not) have not considered actively reflecting this strategy in the management of their DC plans. This speaks to potential gaps in how companies are implementing their CSR strategies, highlighting a possible pension inconsistency risk.