Carbon Collective, the first online investment advisor 100% focused on solving climate change, announced the launch of climate-focused 401(k) plans for employers.
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Despite the significant growth of sustainable investing options in recent years, employers have few options when it comes to offering their employees 401(k) plans that align with climate and environmental goals. A 2021 survey by Schroders found that, among employees who were not offered or were not sure if they were offered ESG options in the retirement accounts, 69% would or might increase their overall contribution rate if offered ESG options. Among employees that were aware of ESG options offered by their company, 9 out of 10 employees invested in them. With the launch of their climate-focused 401(k) portfolios, Carbon Collective is set to offer employees more options when it comes to ESG investing in retirement accounts.
“Employees care about where they work and how the company they work for aligns with their values,” says Zach Stein, co-founder of Carbon Collective. “We wanted to make sure that mission-driven companies can offer their employees benefits like expanded 401(k) options which are aligned with climate initiatives. In today’s competitive employment landscape, environmentally-focused and socially-conscious benefits like these are a critical component to attracting and keeping top talent.”
Carbon Collective’s offering is best suited for small businesses with fewer than 300 employees. The portfolios are diversified, low-fee and are fully integrated across all major cloud-based payroll providers such as TriNet, ADP, Gusto, Intuit, and JustWorks. Carbon Collective’s 401(k) administration is handled by Vestwell or Ubiquity, depending on company preferences. The portfolios offered span a range of three options, featuring Carbon Collective’s Core Climate Portfolio, as well as an ESG option with less impact and lower tracking error, and a traditional index portfolio. The Core Climate portfolio is built around Carbon Collective’s theory of change to divest from fossil fuels and reinvesting in climate solutions, and features higher historical returns and slightly higher standard deviation. Carbon Collective offers a responsive customer care team as part of its suite of solutions to answer questions that employers or employees may have.
“It’s especially important that companies don’t tell their employees how to invest, but give them options to do so that align with their core values,” says Zach Stein. “That’s why we are excited to launch our mission-driven 401(k) service.