October 5, 2014
Written by Jeff Gang, Business Development Associate at Green Century Capital Management
So you want to invest fossil fuel free. Great! Now how do you do it?
Green Century offers many different types of investment accounts. You can open a fossil fuel free IRA (Traditional or Roth), regular investment account, Education Savings Account, and much more – click to see the list and get started. Our regular accounts can be opened by an individual, several people, a trust, or a corporation (including nonprofits, like churches). If you’ve got an investment account with a major firm, including Fidelity or Schwab — or if you work with a financial advisor — you may be able to easily move your money into our Funds.
But for many people, the first and most significant place we face investment decisions is in employer-sponsored retirement plans, such as a 401(k) or 403(b) plan. Unfortunately, many plans have limited options, and don’t offer a fossil fuel free choice.
Here’s a question we hear quite a lot:
“I want to invest fossil fuel free, but I only have a dozen options on the list offered by my work retirement plan. How can I add the Green Century Funds to that list?”
In many cases, all it takes is a conversation with the retirement plan decisionmaker at your company, though it’s not always possible to add new options to these plans.
Here’s what we recommend:
- Talk to your HR or Payroll department, and find out who makes decisions about which options are available through the plan. (Sometimes it’s an investment committee, or several trustees, or the business owner. In every case, this responsibility is delegated and there should be a specific person who handles such requests. We’ll refer to this person as the decisionmaker.)
- Ask the plan administrator – the third-party company that manages the retirement plan accounts – if employees can self-select funds that are not currently on the offered list of investments. This is sometimes called a “window” option.
- If self-selecting is not an option, ask the decisionmaker about the process by which employees can suggest a fund be added to the employer-approved list. Don’t be discouraged if she or he is not enthusiastic.
- The decisionmaker may be apprehensive about socially responsible investment options. Let him or her know that these options have been ruled acceptable within ERISA-governed plans.* (See this link.)
- Provide materials about the Green Century Funds. We recommend providing our Fund Briefs (for the Balanced Fund and the Equity Fund) and our Prospectus. (Click to download them!) You can find many other materials at our Forms & Documents page – or call us if you’re not sure.
- Find other interested colleagues. Companies have reported that demand from plan participants is a major driver in adopting sustainable investment options.† So at your next meeting with the retirement plan decisionmaker, bring another colleague or two, or a statement of interest signed by several colleagues.
- Most importantly, follow up. Keep making your case until you secure the options you want.
If you are the proprietor or decisionmaker for your company’s or organization’s retirement plan, it’s a little easier to get going!
- Contact your retirement plan administrator. (This is the company that manages the accounts and sends statements to employees.)
- Ask your retirement plan administrator if either or both of the Green Century Funds is available through their brokerage.
- If the Green Century Funds are available, find out what it takes to change the options you’re offering to employees.
- If the Green Century Funds aren’t available, you have several choices:
- First, ask the administrator if employees can self-select funds that are not currently on the offered list of investments. This is sometimes called a “window” option.
- Second, you could request that the administrator push the brokerage to sign a selling or other agreement with Green Century. We frequently receive and process such request from brokers.
- Third, you could switch to a new retirement plan administrator that does offer the Green Century Funds. Suggesting this may give you more leverage with your current administrator.
- Most importantly, follow up. You are the administrator’s customer. If the administrator values the business you provide, you are likely to have some leverage to get what you want.
We’re happy to help. Don’t hesitate to contact Green Century with any questions. Call us at 1-800-934-7336 between 9AM and 6PM Eastern, or email us any time.
* Advisory Opinion, PWBA Office of Regulations and Interpretations
† “Opportunities for Sustainable and Responsible Investing in US Defined Contribution Plans”; The Forum for Sustainable and Responsible Investment and Mercer; September 2011. Order a copy at this link.