Fidelity Investments filed a new line of sustainable target-date funds with the Securities and Exchange Commission (SEC) last Friday, cementing its position in the environmental, social and governance (ESG) marketplace.
According to the filing, the Fidelity Sustainable Target Date series will invest at least 80% of its assets in securities it “believes have proven or [are] improving sustainability practices of positive [ESG] characteristics.” Fidelity also filed initial prospectuses for four separate sustainability-based products—an emerging markets fund, a non-U.S. developed markets fund, an investment-grade bond fund and a U.S. market fund. The funds will also be available in vintages ranging from 2010 to 2065.
The filings come after Putnam Investments also launched its sustainable target-date series on Friday for retirement savers. According to the asset manager, Putnam Sustainable Retirement Fund will invest in actively managed sustainable and ESG exchange-traded funds (ETFs) managed by Putnam.
Putnam’s Global Asset Allocation team, who also managed the Putnam Retirement Advantage, will be responsible for the glidepath and both the tactical and ETF allocations of the suite.
“As the retirement marketplace continues to evolve and grow, there is tremendous appetite for meaningful product innovation that creates greater choice of offerings to help working Americans achieve their financial goals,” said Robert L. Reynolds, president and chief executive officer of Putnam Investments, in a statement.
Steven P. McKay, Putnam’s head of Global Defined Contribution Investment Only division, also touched on the “growing interest in sustainable investing within the defined contribution realm,” in the statement. “We are excited to deliver this innovative approach to target-date investing to the retirement savings marketplace,” McKay added.
Despite additions, ESG continues to face pushback
News of both funds comes just after the Department of Labor (DOL) enacted its final rule on the inclusion of ESG funds in 401(k) plans, despite scrutiny and backlash from Republican states.
In January, a coalition of 25 states—led by Texas and Utah—filed a lawsuit against the DOL to halt the final rule from implementation. The suit alleged that the rule violated the Employee Retirement Income Security Act of 1974 (ERISA), as well as the Administrative Procedure Act.
It was yet another challenge for ESG, a term that has divided leaders and companies in the retirement industry due to its political discord. While large asset managers have spearheaded efforts in the ESG space—like Fidelity and Putnam above—others have since abandoned their sustainability practices. Last year, Vanguard withdrew its participation in the Net Zero Asset Managers (NZAM) alliance, an initiative created to battle climate change and hit net-zero targets by 2050.
SEE ALSO:
- DOL’s Walsh, Gomez Discuss New ESG Rule
- Coalition of 25 States Sue Biden Administration on ESG Final Rule
- A Closer Look at Biden Administration’s New ESG Rule: Groom Law Group
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
