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Driving Employee Engagement, Productivity and Impact
through the Use of Sustainable 401(k) Plans
R. Paul Herman
CEO & Foun...
Engaging Employees with Sustainable
401(k)s
Sustainable Brands – NEW METRICS 2018
1
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
Disclosure and Disclaimers
HIP Investor Ratings LLC is a California limited lia...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
About HIP Investor
HIP Investor: since December 6, 2006; now 12th year
126,800+...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
“My work and life are sustainable,

but is my 401(k)?”
Kristen Magnuson, M.Sci
...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
What Millennials Want: 

#1 Purpose of Business Is Building a Better World
80 m...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
Innovators Implementing Sustainable 401(k) Plans
6
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
95% of stok Staff Invest Fossil-free + Gunmaker free
7
Fossil-FreeParticipation
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
The HIP + MVP 401(k) Sustainability 

Education + Impact Ratings Program
1. Sur...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
High level of understanding of
sustainability & impact of
investments on me per...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
17%
32%
68%
80% 84%
Step 2: Educate - 84% of Stock Market Value Is Intangible
(...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
Investing in “100 Best” to Work For Can Beat the
Market (1998-2016)
Source: Rus...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
Usefulness of information &
presenter clear and easy to
understand
 
 
 93%
 
 ...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
The HIP + MVP 401(k) Sustainability 

Education + Impact Ratings Program
1. Sur...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
HIP Ratings = 100 Point Rating

Indicator of Impact, Future Risk, and Future Re...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
Higher Impact Portfolios Can Lead to Higher ReturnsAverage Annual 5-year Total ...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
• Five year performance for financials (risk and return), as of 7/31/2015 HIP R...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
Step 6: Allocate Your 401 (k) for Impact
17
CleanPortfolios.com – A free tool d...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
CleanPortfolios.com: Build Your Sustainable ESG Portfolio
18
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
HIPinvestor.com Portal Rates the Impact of 

2,000 Funds + 7,000 Stocks + 112,0...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
Step 7: Take Action in Your 401(k)
20
• Discovered top customers and suppliers ...
CONFIDENTIAL © 2006-2018 HIP Investor Inc. 21
CONFIDENTIAL © 2006-2018 HIP Investor Inc. 22
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
Rate Your 401(k) Choices with HIP Ratings
23
• Five year performance for financ...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
Invest in Target-Risk Fossil Fuel Free Portfolios
24
• Five year performance fo...
BrightScope. (2015, February 19). The one chart that explains 401(k) fees.
Do You Know Your 401(k) Fees?
25
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
Majority of All 401(k) Participants by Age + Gender

Want to Invest Sustainably...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
Sustainable Portfolios Can
Outperform on Future Risk & Return Potential
“Sustai...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
Contribution Levels
Can Increase
Higher Employee Engagement
And Increased Innov...
29
ERISA Guidance on ESG in 401(k)s
Benefits to Plan Sponsors
Offer a 401(k) program that aligns with company values
Gives your employees options for sustaina...
31
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
Credit Suisse calculates Outperformance of 

Global Firms with One or More Wome...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
Harvard 2010: Sustainability 

Can Benefit Portfolio Value
33
+25%
premium
+40%...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
Health
Wealth
Earth
Equality
Trust
HIP’s Factors Connect Directly to Cash Flow,...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
HIP Ratings: Corporate Faceoffs
PEPSI COCA-COLA
Overall HIP Rating 57.8% 55.9%
...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
Pax Ellevate, MFS and Portfolio 21 Are High Impact-Rated
Global Equity Funds
36
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
HIP Ratings of Mutual Fund: Portfolio 21
37
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
HIP Ratings of Mutual Fund Holdings: Portfolio 21
38
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
Three Steps Toward a Fossil Fuel Free 401(k) Plan
https://fossilfreefunds.org/f...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
FossilFreeFunds.org: 

Measures Exposure to Coal, Oil, Gas, Fossil-Burning Util...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
Parnassus Endeavour (Workplace, Fossil Free) Fund

(Ticker: PARWX)
Investing in...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
Overpaid CEOs Deliver Negative TSR, Lose Value
Source: ISS; Thomson Reuters; As...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
HIP-Selected Fossil-Fuel-Free Fund Choices
Source: Morningstar; HIP Investor Ra...
CONFIDENTIAL © 2006-2018 HIP Investor Inc.
Your 401(k) Can Be A Force for Climate Action
https://www.fastcompany.com/30596...
The Debate Over Adding
ESG to the DC Lineup
New Metrics 2018
What plan participants demand
• Natixis Investment Managers, Survey of Defined Contribution Plan Participants compiled by ...
Moving from participation to engagement
• Natixis Investment Managers, Survey of Defined Contribution Plan Participants co...
Is there a performance tradeoff?
Source: MPI Stylus/Morningstar (9/30/2007-6/30/2018)
The MSCI World ESG Leaders Index (Ne...
H E A LT H W E A LT H C A R E E R
OCTOBER 31, 2018
Max Messervy
Responsible Investment Consultant
Boston
R E S P O N S I B...
Copyright © 2018 Mercer (US) Inc. All rights reserved. !2
• The goal of this project is to improve outcomes for retirement...
Copyright © 2018 Mercer (US) Inc. All rights reserved. !3
R E S P O N S I B L E I N V E S T M E N T: 

A R A N G E O F A P...
Copyright © 2018 Mercer (US) Inc. All rights reserved. !4
E S G C O N S I D E R AT I O N S A N D P L A N S P O N S O R S :...
Copyright © 2018 Mercer (US) Inc. All rights reserved. !5
D O N ’ T F O R G E T F I D U C I A R Y D U T Y C O N S I D E R ...
Copyright © 2018 Mercer (US) Inc. All rights reserved. !6
I M P O R TA N T N O T I C E S 

References to Mercer shall be c...
Copyright © 2018 Mercer (US) Inc. All rights reserved. !7
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Driving Employee Engagement, Productivity and Impact through the Use of Sustainable 401(k) Plans - R. Paul Herman, Marla Skeffington, Max Messervy, Philip Jordan & Timothy Yee

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Educating and engaging employees on sustainability solutions is becoming essential for any company’s success. Rating the sustainability of a company’s 401(k) plan is a new tool to boost employee engagement, boost productivity through employee satisfaction, and spur staff to save more for a better future. Higher impact portfolios — which can reduce future risk and enhance future return — are possible when employees see the true impact performance of the holdings inside their 401(k) fund choices. Learn how you can educate, empower and engage your employees in their 401(k), and how to align the 401(k) choices in question with a company’s mission and sustainability goals.

Published in: Leadership & Management
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Driving Employee Engagement, Productivity and Impact through the Use of Sustainable 401(k) Plans - R. Paul Herman, Marla Skeffington, Max Messervy, Philip Jordan & Timothy Yee

  1. 1. Driving Employee Engagement, Productivity and Impact through the Use of Sustainable 401(k) Plans R. Paul Herman CEO & Founder HIP INVESTOR RATINGS + PORTFOLIOS @HIPinvestor Marla Skeffington Vice President, Retirement Strategies MARS WRIGLEY CONFECTIONERY @NatixisIM Max Masservy Senior Associate, Responsible Investment MERCER @MaxMesservy Phillip Jordan Vice President and Principal BW RESEARCH PARTNERSHIP
  2. 2. Engaging Employees with Sustainable 401(k)s Sustainable Brands – NEW METRICS 2018 1
  3. 3. CONFIDENTIAL © 2006-2018 HIP Investor Inc. Disclosure and Disclaimers HIP Investor Ratings LLC is a California limited liability company, providing 121,800+ ratings for investors, advisers, fund managers and retirement plans. R. Paul Herman is a registered representative of HIP Investor Inc., an investment adviser registered in the States of California, Washington, and Illinois, with clients across the USA. This is not an offer of securities. All investing has risks. 
 Past results are not indicative of future performance. 2
  4. 4. CONFIDENTIAL © 2006-2018 HIP Investor Inc. About HIP Investor HIP Investor: since December 6, 2006; now 12th year 126,800+ HIP ESG Ratings (7000+ corporates; 112,300 munis) 5 HIP Strategies with track records of 4 to 8 years 5 HIP Fossil-Fuel-Free Portfolios, including 401(k)s 
 Clients: 401(k)s, 403(b), wealth advisors, RIAs/advisors, 
 fund managers, hedge funds, college endowments 
 The HIP Investor textbook/ebook/audiobook
 in 27 universities, MBA, and MPA programs Newsweek Green Rankings, 2015, 2016, 2017 HIP Investor featured in NYTimes (2017, 2014, 2011), 
 Fast Company magazine (2006-2018), and more 3
  5. 5. CONFIDENTIAL © 2006-2018 HIP Investor Inc. “My work and life are sustainable,
 but is my 401(k)?” Kristen Magnuson, M.Sci LEED AP - Architect Stok LLC 4
  6. 6. CONFIDENTIAL © 2006-2018 HIP Investor Inc. What Millennials Want: 
 #1 Purpose of Business Is Building a Better World 80 million Millennials in USA Inheriting $40 Trillion from Boomers Source: Deloitte global survey of Millennials 5
  7. 7. CONFIDENTIAL © 2006-2018 HIP Investor Inc. Innovators Implementing Sustainable 401(k) Plans 6
  8. 8. CONFIDENTIAL © 2006-2018 HIP Investor Inc. 95% of stok Staff Invest Fossil-free + Gunmaker free 7 Fossil-FreeParticipation
  9. 9. CONFIDENTIAL © 2006-2018 HIP Investor Inc. The HIP + MVP 401(k) Sustainability 
 Education + Impact Ratings Program 1. Survey 2. Educate 3. Feedback 4. Rate Funds 5. Discuss 6. Prioritize 7. Change Your 401(k) Building Bridges 2012 Copyright 2012 - 2018 All Rights Reserved 8
  10. 10. CONFIDENTIAL © 2006-2018 HIP Investor Inc. High level of understanding of sustainability & impact of investments on me personally       24%     Adequacy of 401(k) education         34%     Diversity & education of sustainable investment choices       26%     Desire to do good with investing         81%     Overall level of trust of the financial markets & advisors     28% Step 1: Survey - Get a baseline of your employees understanding and attitudes of their 401(k) plan and investments Building Bridges 2012 Copyright 2012 - 2018 All Rights 9
  11. 11. CONFIDENTIAL © 2006-2018 HIP Investor Inc. 17% 32% 68% 80% 84% Step 2: Educate - 84% of Stock Market Value Is Intangible (People, Patents, Brands) 10
  12. 12. CONFIDENTIAL © 2006-2018 HIP Investor Inc. Investing in “100 Best” to Work For Can Beat the Market (1998-2016) Source: Russell Investment Group, via © Great Places To Work® Institute 1998-2016, ANNUALIZED RETURNS 11
  13. 13. CONFIDENTIAL © 2006-2018 HIP Investor Inc. Usefulness of information & presenter clear and easy to understand      93%     Desire to have more information on sustainability, impact and ESG         79%     Desire to know your sustainability and impact scores on your investments       77%     If you could see the impact of your investments quantified would you contribute more to your 401(k) plan      55%         Do you think creating a signature for your company around sustainability would increase market share and better engage employees     71% Building Bridges 2012 Copyright 2012 - 2018 All Rights Reserved 12 Half to nearly all want more sustainable 401(k) options
  14. 14. CONFIDENTIAL © 2006-2018 HIP Investor Inc. The HIP + MVP 401(k) Sustainability 
 Education + Impact Ratings Program 1. Survey 2. Educate 3. Feedback 4. Rate Funds 5. Discuss 6. Prioritize 7. Change Your 401(k) Building Bridges 2012 Copyright 2012 - 2018 All Rights Reserved 13
  15. 15. CONFIDENTIAL © 2006-2018 HIP Investor Inc. HIP Ratings = 100 Point Rating
 Indicator of Impact, Future Risk, and Future Return Worst: 0 HIP Rating Best: 100 Net Negative IMPACT Health, Wealth, Earth, Equality, Trust Net Positive More Volatile Future RISK More Resilient Lesser Potential Future RETURNS Stronger Potential HIP RATINGZero 100
  16. 16. CONFIDENTIAL © 2006-2018 HIP Investor Inc. Higher Impact Portfolios Can Lead to Higher ReturnsAverage Annual 5-year Total Shareholder Return of 7,000 Global Equities Segmented by HIP Investor Ratings (for period ending 12/31/2017) -5.0% 0.7% 6.5% 12.3% 18.0% 0-10% 21-30% 41-50% 61%-70% 16.3% 12.9%12.8% 11.2%11.1% 10.3% 4.0% -2.7% Source: Thomson Reuters; HIP Investor Ratings scores and analysis Total Shareholder Return (TSR) includes capital gains and reinvested dividends 15
  17. 17. CONFIDENTIAL © 2006-2018 HIP Investor Inc. • Five year performance for financials (risk and return), as of 7/31/2015 HIP Ratings cover sustainable performance for the years 2013-2014. • FEES represent the average expense ratio of the underlying investments; Additional fees for the plan are typically charged, and vary by provider. 16 Step 5: 
 Discuss

  18. 18. CONFIDENTIAL © 2006-2018 HIP Investor Inc. Step 6: Allocate Your 401 (k) for Impact 17 CleanPortfolios.com – A free tool during 2018 to evaluate and build portfolios
  19. 19. CONFIDENTIAL © 2006-2018 HIP Investor Inc. CleanPortfolios.com: Build Your Sustainable ESG Portfolio 18
  20. 20. CONFIDENTIAL © 2006-2018 HIP Investor Inc. HIPinvestor.com Portal Rates the Impact of 
 2,000 Funds + 7,000 Stocks + 112,000 Bonds 19
  21. 21. CONFIDENTIAL © 2006-2018 HIP Investor Inc. Step 7: Take Action in Your 401(k) 20 • Discovered top customers and suppliers are in firm’s 401(k) mutual funds – employees are now investing more • Launched conflict-minerals-free supply-chain program, which gained attention from customers • Added more sustainable mutual fund choices Both branded “sustainable”/SRI/ESG (e.g. Trillium)… …and well-managed non-SRI-branded funds
 • Demanding its 401(k) provider be more alert to sustainability – which links to future risk and return • Won a state award and grant funds for sustainability
  22. 22. CONFIDENTIAL © 2006-2018 HIP Investor Inc. 21
  23. 23. CONFIDENTIAL © 2006-2018 HIP Investor Inc. 22
  24. 24. CONFIDENTIAL © 2006-2018 HIP Investor Inc. Rate Your 401(k) Choices with HIP Ratings 23 • Five year performance for financials (risk and return), as of 12/31/2017 HIP Ratings cover sustainable performance for the years 2015-2016-2017. • FEES represent the average expense ratio of the underlying investments; Additional fees for the plan are typically charged, and vary by provider.
  25. 25. CONFIDENTIAL © 2006-2018 HIP Investor Inc. Invest in Target-Risk Fossil Fuel Free Portfolios 24 • Five year performance for financials (risk and return), as of 12/31/2017 HIP Ratings cover sustainable performance for the years 2015-2016-2017. • FEES represent the average expense ratio of the underlying investments; Additional fees for the plan are typically charged, and vary by provider.
  26. 26. BrightScope. (2015, February 19). The one chart that explains 401(k) fees. Do You Know Your 401(k) Fees? 25
  27. 27. CONFIDENTIAL © 2006-2018 HIP Investor Inc. Majority of All 401(k) Participants by Age + Gender
 Want to Invest Sustainably in their 401(k) 26Source: Natixis survey
  28. 28. CONFIDENTIAL © 2006-2018 HIP Investor Inc. Sustainable Portfolios Can Outperform on Future Risk & Return Potential “Sustainable equity mutual funds had 
 equal or higher median returns 
 and equal or lower volatility (risk) 
 than traditional funds for 
 64% of the periods examined” http://www.morganstanley.com/ideas/business-case-for-sustainable-investing 27
  29. 29. CONFIDENTIAL © 2006-2018 HIP Investor Inc. Contribution Levels Can Increase Higher Employee Engagement And Increased Innovation Participation Rates Can Increase Stronger, Resilient Plan Performance Ability to Attract Millennials Benefits of Adopting A Sustainable 401(k) Program Quality of 401(k) Education & Understanding Can Increase Future Portfolio Risk Can Decrease Rollover Rates Can Increase Fiduciary Risk Managed Employee Trust in Plan & Financial Markets Can Increases Benefits of ESG Education and Impact Ratings 401(k) Program for Employees and Plan Sponsors Building Bridges 2012 Copyright 2012 - 2018 All Rights Reserved 28
  30. 30. 29 ERISA Guidance on ESG in 401(k)s
  31. 31. Benefits to Plan Sponsors Offer a 401(k) program that aligns with company values Gives your employees options for sustainable investing Attract and retain top talent Tax advantageous opportunities Reduce risk by offering a conflict-free sustainable 401(k) solution Bring ESG screening and sustainable investments to your 401(k) plans with our open-architecture recordkeeping platform Deliver a seamless experience for retirement plan participants with investments that align with their values Sustainable 401(k) Investm ent Freedo m Conflict- Free Philosop hy Low Investm ent Costs Full Fee Transpar ency Payroll Integrati on & Automati on Financia l Wellnes s & Educatio n Sustaina bility Ratings Increase d Participa tion Best-In- Class Client Services 30
  32. 32. 31
  33. 33. CONFIDENTIAL © 2006-2018 HIP Investor Inc. Credit Suisse calculates Outperformance of 
 Global Firms with One or More Women on Board No Women On Board +5% 1+ Woman on Board +40% 32
  34. 34. CONFIDENTIAL © 2006-2018 HIP Investor Inc. Harvard 2010: Sustainability 
 Can Benefit Portfolio Value 33 +25% premium +40% premium
  35. 35. CONFIDENTIAL © 2006-2018 HIP Investor Inc. Health Wealth Earth Equality Trust HIP’s Factors Connect Directly to Cash Flow, Profit and Shareholder Value Products & Services Operating Metrics Mgmt Practices IM PA CT “How HIP Is This Investment?” HIP = Human Impact + Profit
 Strategic Innovation & Risk Mitigation Higher Revenue potential Lower Cost potential 34
  36. 36. CONFIDENTIAL © 2006-2018 HIP Investor Inc. HIP Ratings: Corporate Faceoffs PEPSI COCA-COLA Overall HIP Rating 57.8% 55.9% Earth Pillar Rating 56.2% 46.6% Energy Used Per $1,000 Revenue 1.16 gigajoules 1.39 gigajoules CO2 Emissions Per $1 million Revenue 89 metric tons 123 metric tons Waste Recycled Per Total Waste 93.83% unavailable Water Usage Per $1 million Revenue 1,470 cubic meters 6,861 cubic meters 35
  37. 37. CONFIDENTIAL © 2006-2018 HIP Investor Inc. Pax Ellevate, MFS and Portfolio 21 Are High Impact-Rated Global Equity Funds 36
  38. 38. CONFIDENTIAL © 2006-2018 HIP Investor Inc. HIP Ratings of Mutual Fund: Portfolio 21 37
  39. 39. CONFIDENTIAL © 2006-2018 HIP Investor Inc. HIP Ratings of Mutual Fund Holdings: Portfolio 21 38
  40. 40. CONFIDENTIAL © 2006-2018 HIP Investor Inc. Three Steps Toward a Fossil Fuel Free 401(k) Plan https://fossilfreefunds.org/fossil-free-action-toolkit 39
  41. 41. CONFIDENTIAL © 2006-2018 HIP Investor Inc. FossilFreeFunds.org: 
 Measures Exposure to Coal, Oil, Gas, Fossil-Burning Utilities 40
  42. 42. CONFIDENTIAL © 2006-2018 HIP Investor Inc. Parnassus Endeavour (Workplace, Fossil Free) Fund
 (Ticker: PARWX) Investing in “Best” Companies to Work For Can Beat S&P500 (4/21/2006 to 3/19/2018) +149% +133% Source: Yahoo Finance 41
  43. 43. CONFIDENTIAL © 2006-2018 HIP Investor Inc. Overpaid CEOs Deliver Negative TSR, Lose Value Source: ISS; Thomson Reuters; As You Sow; HIP InvestorSource: HIP Investor; Thomson Reuters; As You Sow; ANNUALIZED 42 Total Shareholder Return (TSR), annualized over 3-year period 
 Before and After 2015 Most Overpaid CEOs report
  44. 44. CONFIDENTIAL © 2006-2018 HIP Investor Inc. HIP-Selected Fossil-Fuel-Free Fund Choices Source: Morningstar; HIP Investor Ratings; performance as of 3.31.2018 43
  45. 45. CONFIDENTIAL © 2006-2018 HIP Investor Inc. Your 401(k) Can Be A Force for Climate Action https://www.fastcompany.com/3059618/how-to-convince-your-employer-to-divest-your-401k-from-fossil-fuels 44
  46. 46. The Debate Over Adding ESG to the DC Lineup New Metrics 2018
  47. 47. What plan participants demand • Natixis Investment Managers, Survey of Defined Contribution Plan Participants compiled by CoreData Research, August 2016. Survey included 951 respondents. 82% 84% 82% 79% 83% Female 79% Male I would like my investments to reflect my personal values 78% 84% 78% 74% 81% Female 75% Male I believe it is important to make the world a better place while growing my personal assets 74% 77% 79% 68% 79% Female 69% Male I would like to see more socially responsible investments in my retirement plan offering ● Overall ● Millennials ● Generation X ● Baby Boomers New Metrics 2018
  48. 48. Moving from participation to engagement • Natixis Investment Managers, Survey of Defined Contribution Plan Participants compiled by CoreData Research, August 2016. Survey included 951 respondents. 73% 74% 77% 68% 75% Female 71% Male I believe companies that provide clean water and clean energy present significant growth opportunities for my investments 64% 70% 63% 60% 68% Female 59% Male I am concerned about the environmental, social and ethical records of the companies I invest in 62% 71% 66% 53% 65% Female 61% Male I would be more likely to contribute/increase my contributions to my retirement plan if I knew my investments were doing social good ● Overall ● Millennials ● Generation X ● Baby Boomers New Metrics 2018
  49. 49. Is there a performance tradeoff? Source: MPI Stylus/Morningstar (9/30/2007-6/30/2018) The MSCI World ESG Leaders Index (Net) is a capitalization weighted index that provides exposure to companies with high Environmental, Social and Governance (ESG) performance relative to their sector peers. MSCI World ESG Leaders Index is constructed by aggregating the following regional Index MSCI Pacific ESG Leaders Index, MSCI Europe & Middle East ESG Leaders Index, MSCI Canada ESG Leaders Index and MSCI USA ESG Leaders Index. The parent index is MSCI World Index, which consists of large and mid-cap companies in multiple Developed Market Countries. The Index is designed for investors seeking a broad, diversified sustainability benchmark with relatively low tracking error to the underlying equity market. The index is a member of the MSCI ESG Leaders Index series. Constituent selection is based on data from MSCI ESG Research.
 The MSCI World Index (Net) is an unmanaged index that is designed to measure the equity market performance of developed markets. It is comprised of common stocks of companies representative of the market structure of developed market countries in North America, Europe, and the Asia/Pacific Region. The index is calculated without dividends, with net or with gross dividends reinvested, in both U.S. dollars and local currencies. 
 Past performance is no guarantee of, and not necessarily indicative of, future results.
 For Illustrative Purposes Only. Not indicative of an investible product or strategy.
 Sharpe Ratio: A measure of risk-adjusted return, calculated by dividing an investment's excess return over a riskless asset (such as the 3-Month T-Bill) by its standard deviation of returns. The higher the Sharpe ratio, the better the historical risk-adjusted performance. ESG-focused equity index has kept pace with the broad market Hypothetical growth of $100 9/2007 - 6/2018 Risk-adjusted returns are also comparable across multiple timeframes Sharpe Ratio for periods ending 6/30/2018 0 45 90 135 180 9/30/07 3/31/09 9/30/10 3/31/12 9/30/13 3/31/15 9/30/16 3/31/18 MSCI World ESG Leaders NR USD MSCI World NR USD 0 0.25 0.5 0.75 1 3 Years 5 Years 10 years 0.44 0.96 0.77 0.43 0.91 0.73 MSCI World ESG Leaders NR USD MSCI World NR USD New Metrics 2018
  50. 50. H E A LT H W E A LT H C A R E E R OCTOBER 31, 2018 Max Messervy Responsible Investment Consultant Boston R E S P O N S I B L E R E T I R E M E N T P L A N S T H E 4 0 1 ( K ) O P P O R T U N I T Y
  51. 51. Copyright © 2018 Mercer (US) Inc. All rights reserved. !2 • The goal of this project is to improve outcomes for retirement plan beneficiaries by lowering barriers to the adoption of responsible retirement practices through education, dispelling myths about responsible investing and empowering engaged employees to better understand their possible options to begin saving for retirement responsibly. • Two Toolkits to be released for practitioners: W B C S D A L I G N I N G R E T I R E M E N T A S S E T S I N I T I AT I V E 
 A D VA N C I N G R E S P O N S I B L E R E T I R E M E N T P L A N S Toolkit #1 End of November An introduction to retirement plans and how responsibility might be considered in different plan structures and contexts Toolkit #2 Early 2019 A “tactical” approach to responsible retirement plans: helping individuals have conversations with the right people internally, typical objections raised and ways to respond
  52. 52. Copyright © 2018 Mercer (US) Inc. All rights reserved. !3 R E S P O N S I B L E I N V E S T M E N T: 
 A R A N G E O F A P P R O A C H E S A N D M E T H O D S
  53. 53. Copyright © 2018 Mercer (US) Inc. All rights reserved. !4 E S G C O N S I D E R AT I O N S A N D P L A N S P O N S O R S : 
 R E L E VA N C E O F VA R I O U S I N V E S T M E N T A C T I V I T I E S
  54. 54. Copyright © 2018 Mercer (US) Inc. All rights reserved. !5 D O N ’ T F O R G E T F I D U C I A R Y D U T Y C O N S I D E R AT I O N S
  55. 55. Copyright © 2018 Mercer (US) Inc. All rights reserved. !6 I M P O R TA N T N O T I C E S 
 References to Mercer shall be construed to include Mercer LLC and/or its associated companies. © 2018 Mercer LLC. All rights reserved. This contains confidential and proprietary information of Mercer and is intended for the exclusive use of the parties to whom it was provided by Mercer. Its content may not be modified, sold or otherwise provided, in whole or in part, to any other person or entity, without Mercer’s prior written permission. The findings, ratings and/or opinions expressed herein are the intellectual property of Mercer and are subject to change without notice. They are not intended to convey any guarantees as to the future performance of the investment products, asset classes or capital markets discussed. Past performance does not guarantee future results. Mercer’s ratings do not constitute individualized investment advice. Information contained herein has been obtained from a range of third party sources. While the information is believed to be reliable, Mercer has not sought to verify it independently. As such, Mercer makes no representations or warranties as to the accuracy of the information presented and takes no responsibility or liability (including for indirect, consequential or incidental damages), for any error, omission or inaccuracy in the data supplied by any third party. This does not constitute an offer or a solicitation of an offer to buy or sell securities, commodities and/or any other financial instruments or products or constitute a solicitation on behalf of any of the investment managers, their affiliates, products or strategies that Mercer may evaluate or recommend. For the most recent approved ratings of an investment strategy, and a fuller explanation of their meanings, contact your Mercer representative. For Mercer’s conflict of interest disclosures, contact your Mercer representative or see www.mercer.com/conflictsofinterest. Mercer’s universes are intended to provide collective samples of strategies that best allow for robust peer group comparisons over a chosen timeframe. Mercer does not assert that the peer groups are wholly representative of and applicable to all strategies available to investors.
  56. 56. Copyright © 2018 Mercer (US) Inc. All rights reserved. !7

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