ESG in the Eyes of a Plan Sponsor: An Interview with Johnny Liang

How do you personally define ESG investing, and how do recent conversations on diversity and inclusion factor into ESG investing in the DC space?

From my perspective, I see ESG investing as investment approach that takes into consideration the impact of environmental, social, and governance implications while seeking positive returns. Discussions around ESG investing have come to sharper focus in the recent years and I think the recent conversations on diversity, inclusion, and belonging certainly amplifies the “S” in ESG as a critical area to look at when it comes to ESG investing.

How has your organization's DC plan been dealing with ESG investing? Is there some form of ESG investing already embedded, or is it still a process in the works?

We have been looking at the area of ESG investing from time to time and we have an increasing focus on ESG initiatives too as a company. There are ongoing discussions at the Committee level to understand the landscape and how it is evolving. It is certainly still a work in progress.

How much interest do you observe from your participants on having ESG options in their DC plans? Is there a particular age cohort (younger participants, for example) that is more receptive towards ESG options? If so, do you see younger participants as a force of increased conversation and implementation of ESG throughout the DC industry, or is it something that should apply to all groups?

We have not had a tremendous amount of interest from our participants in having ESG options in our Plan. Given our corporate focus, we have had inquiries from different levels of employees as to wanting to understand more the latest perspective and developments in this area. I believe that participants in the early career demographics will have an impact on increasing the level of conversations and potential implementation in the ESG investing space as we know that understanding and aligning with purpose is a key driver in attracting, engaging, and retaining that talent segment. At the same time, I also think that given the continuing emphasis and ongoing conversations on diversity, social justice and etc, will likely continue to generate interest in wanting ESG options.

Many plan sponsors see a lack of universally-accepted metrics or standards for ESG investing as the biggest roadblock towards ESG in DC, how do you view this issue, or do you think there are other roadblocks for ESG in DC?

I agree that is one of the key challenges when it comes ESG investing is varying perspectives on metrics and standards which makes it challenging who meets what criteria. Part of it is also that the ESG related issues can be expansive and ever evolving; and that can make it challenging to sift through all the analyses. As more and more plan sponsons consider ESG investing and options, I hope that we will all be able to contribute to creating and establish standards and guidelines for the future of ESG investing.

When it comes to implementing ESG options in DC, which stakeholders in our industry do you feel are most important to the future of ESG investing in DC - the managers constructing the funds, the plan sponsors distributing and communicating them, or the participants themselves?

We know ESG investing is not just a trend and it is definitely here to stay. So I think all the stakeholders play a key role in the future of it. Certainly the growing interest from the participants creates demand, and it leads to plan sponsors to want to understand the landscape and look for products in the space. That results in fund managers constructing the funds in that space. So it is an ecosystem that connects all to move this forward.