Voya Financial is the first publicly traded company to receive an Environmental, Social and Governance (ESG) Retirement Plan Certification from DALBAR.
DALBAR’s ESG Plan Certification is an annual process to evaluate a plan’s success in actively applying ESG principles to its retirement plan. Voya received the certification, along with a five-star rating, for the 401(k) plans offered to its own employees, according to the June 10 announcement.
DALBAR observes that the administration of 401(k) and similar plans have “escaped the scrutiny of corporate responsibility” while all other aspects of a company garner accolades for being champions of ESG. The firm notes that a company retirement plan is as much a part of any company as its payroll, but has never been evaluated with the same degree of diligence regarding its effect on the environment, social impact and governance.
The firm’s Retirement Plan Certification includes a review of all ESG factors, including:
- environmental factors such as paper suppression, automatic enrollment and online capabilities;
- social factors like matching contributions and phone center capabilities; and
- governance factors, such as plan fees, regulation compliance and investment policy.
The underlying principle of the ESG Plan Certification is the recognition of providing an incentive for continuous improvement of plans to achieve this goal, where a five-star rating is achieved by supporting ESG characteristics. Three levels of awards are granted for retirement plan stewardship:
- five stars for achieving a superior standard;
- four stars for achieving excellence; and
- three stars for achieving success.
“While the topic of ESG has grown in popularity over the last several years, particularly as it pertains to investments within a plan, we recognize that building strong ESG practices into workplace benefits and a retirement plan involves multiple considerations,” says Heather Lavallee, CEO of Wealth Solutions for Voya Financial. “Whether looking at digital capabilities that can reduce print consumption or plan enrollment and default investment options, there are many factors to consider when looking at ways you can incorporate ESG best practices in a retirement plan.”
In addition, the firm suggests that interest in ESG is becoming increasingly important to individuals themselves. More than half (60%) of individuals say they would likely contribute more to an ESG-aligned retirement plan if it was certified, according to Voya’s June 2020 “ESG Principles & Investing” study. Moreover, the majority (83%) of working Americans find it important to apply ESG principles to workplace benefits, according to a separate Voya survey conducted in January 2021.
“There are four goals of our ESG certification: spot issues before they become problems; make cost-effective plan enhancements; gain public and internal recognition of the achievement; and enhance recruitment of talented candidates,” said Louis Harvey, President and CEO of DALBAR, Inc.
Voya notes that it provided assistance to DALBAR in developing this certification, but has no role in the assessment process.
