Morningstar - Q2 2023 - 14

Dispatches
investment strategy, either through a general
sustainability mandate or exclusionary
screens on specific industries or products.
As of 2020, 16% of all plans offered at least
one investment employing one, or both,
of these approaches. As with other trends in
the retirement system, the largest plans
are leading the way, with nearly 20% offering
such an investment. These investments have
the potential to increase participation if
they can engage employees who would otherwise
not save in their workplace plan by allowing
them to invest in line with their values.
A recent survey found that a growing number
of investors, particularly millennials, expressed
interest in sustainable investing.2
Sustainable strategies are more likely to be offered
as a single-asset investment than an all-in-one
target-date fund, meaning that assets in these
investments will likely increase more slowly than
overall retirement plan assets, but increasing
engagement and participation in the system can
create long-term impact.
Regulatory uncertainty has kept growth of
sustainable assets in plans small, but these
strategies may be key to engaging additional
participants. We estimate that just over
$50 billion within defined-contribution plans
with 100 or more participants is in investments
with a sustainable mandate or employing
exclusions, not an insignificant amount, but less
than 0.8% of the total assets in these plans.
This is in large part because plans have
been hesitant to even make these investments
available in the ever-changing regulatory
environment. However, strong interest among
young investors who will be the future bulk
of defined-contribution plan participants suggests
sustainable investments could be an avenue
that plans should be exploring to encourage
greater participation in the system. K
Lia Mitchell is a senior analyst, policy research,
at Morningstar.
Women Make Inroads
on Corporate Boards
But C-suite gains
are scant.
Jackie Cook
SUSTAINABILITY MATTERS
these being the CEO, the CFO, and at least three
other highest-compensated executives. Women's
share of these executive positions grew
just 6 percentage points over 10 years. That rate
shows no sign of accelerating and will not
deliver gender parity until well into the second
half of this century.
Women have made strong inroads in corporate
board membership, thanks to mounting
shareholder and regulatory pressure. But in the
C-suite, gains have been limited, according to
Morningstar's Executive Insight data.
At the end of 2022, some 28% of Russell 3000
board members were women, up from 16%
in 2017. For the largest 100 companies, female
representation on boards reached 33%, up
from 24% in 2017, according to annual tracking by
the 50/50 Women on Boards campaign.
But progress in the C-suite has been far
less impressive. In 2021, women made up 15%
of all S&P 500 named executive officers-
For investors, this will have repercussions, as
over the longer term, better stock price
performance and value-creation strategies are
associated with greater female representation
on boards and management teams. For 43%
of the largest companies in the United States, the
topmost layer in the corporate hierarchy
is all male. This is an improvement from 66% in
2012, but firms have been slow to add a second
woman to their top ranks ( EXHIBIT 1 ).
Female CEOs remain an extreme rarity: Just 6.3%
of all S&P 500 companies were led by a woman
at the close of fiscal 2021-barely 2 percentage
points higher than 10 years ago.
In the C-Suite, Women Earn Just $0.82 for
Every Dollar Earned by Men
Pay differentials in the executive suite have
proved similarly intractable: During fiscal
2021, women earned $0.82 for every $1 earned
EXHIBIT 1
Slow Progress Few S&P 500 companies have more than one woman in top
executive positions.
60
One or More Female
Executive Officers
40
20
2012
2013 2014 2015 2016 2017 2018 2019 2020 2021
Fiscal Year
Source: Morningstar Executive Insight database. Data as of Feb. 27, 2023.
2 Morgan Stanley. 2021. " Sustainable Investing Sentiment Weathers Economic Uncertainty. " Institute for Sustainable Investing, Oct. 27.
% of Top Executives
Male
Female
100
14
Morningstar Q2 2023
$10M
Average Executive
Compensation
Male
Two or More Female
Executive Officers
Female CEO
Percentage of S&P 500 Companies

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Morningstar - Q2 2023

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