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Shlomo Benartzi joins board of Sphere to help employers make informed decisions about ESG and climate funds in 401(k)s

Survey found that 76% of people with 401(k)s do not know what ESG means, but 77% want to invest their money for a better climate future

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September 27, 2022

Shlomo Bernartzi

WALNUT, Calif. – Behavioral economics professor Shlomo Benartzi, known for the influence his research has had on retirement savings plans in the US, has joined the board of fintech startup Sphere, a company on a mission to get climate-friendly options in every 401(k).

According to a July survey designed by Sphere with the help of Prof. Benartzi, 76% of retirement plan participants do not know what the term ESG means.

The top answer when asked what ESG means was “Economic Stock Growth.”

ESG stands for Environmental, Social, and Governance investing, and while it is a commonly-used term in the finance industry, few outside the industry know the term. When asked how they feel about climate change, however, 80% of respondents said they are somewhat, very, or extremely worried. 77% want to be able to invest for a better climate future.

Sphere makes it easy for employers to offer climate-friendly investment options in their retirement plans while maintaining their fiduciary duty, with affordable products that demonstrate strong performance compared to benchmarks. The Sphere 500 Climate Fund (SPFFX) avoids fossil fuel industry investments and votes the shares of the companies it does invest in taking into account our planet, rather than automatically approving board recommendations.

Benarzi joins the Sphere board to help fiduciaries make informed decisions about ESG and climate investing, during a time of confusion as global dollars allocated to ESG investing reach all-time highs, but recent media and Securities and Exchange Commission (SEC) spotlights on greenwashing in the finance industry bring skepticism to the field.

“It’s clear that most workers are very confused about ESG investing,” said Prof. Benartzi. “They literally don’t even know what the letters stand for. Is the “E” for economics, the environment or maybe entertainment? As an industry, we need to help participants, advisors and sponsors make informed choices.”

Climate-friendly investing can improve 401(k)s by both protecting the long-term savings of plan participants, as well as by increasing participation when participants feel they can have an impact with their investments.

A study by the NYU Center for Sustainable Business reviewing 59 studies about the performance of climate-focused funds found that 43% showed a positive correlation between climate focus and performance, and only 14% showed a negative correlation. The Sphere index’s 10-year back test validates the academic findings, showing improved performance compared to an index of the top 500 US companies that includes fossil fuel companies.

Excluding the fossil fuel industry from portfolios also protects investors from stranded asset risk - the risk that public pressure and regulations will require oil, gas, and coal companies to “leave it in the ground,” resulting in a devaluation of the key assets on the companies’ balance sheets and loss of value of the shares in those companies.

Surveys have shown that offering ESG investment options can increase the contributions that plan participants make to their retirement savings plans.

“We could not be more honored to have Shlomo joining our board of directors,” said Sphere founder and CEO Alexandra Wright-Gladstein. “His insights and expertise have had an enormous impact on everyday Americans and their ability to retire in comfort, and those insights are now helping us ensure everyone has a healthy planet to enjoy in retirement.”

Benartzi co-developed the Save More Tomorrow (SMarT) program with Nobel Laureate Richard Thaler, which helps employees improve their savings rates over time, and is now implemented by the majority of large retirement plans in the United States, with key elements included in the Pension Protection Act of 2006. He currently serves as Senior Academic Advisor for the Voya Behavioral Finance Institute for Innovation, and has served on advisory boards for Acorns, WisdomTree, Morningstar and Personal Capital.

About Sphere

Sphere is a registered public benefit corporation that is on a mission to get climate-friendly investment options in every 401(k). The company sponsors climate-friendly financial products that are designed for 401(k) plans, allowing retirement plan fiduciaries to maintain their commitment to fiduciary duty without having to compromise on climate. Learn more at www.oursphere.org. For more information reach out to hello@oursphere.org. ‍

To learn more about investing in the Sphere 500 fund: www.oursphere.org

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As with all investments, there are risks involved with investing in SPFFX. Risks include, but are not limited to, sustainability considerations, general market or market event, common stock risks, climate investing considerations risk, sector risk, and third-party data risks as it relates to the composition of the Index. For a detailed explanation of the risks associated with SPFFX and the underlying Index, please read the prospectus.

The Sphere 500 Climate Fund tracks the Sphere 500 Fossil-Free Index. The Sphere 500 Fossil-Free Index starts with the top 500 US companies by market capitalization and then excludes those companies designated as participants in the fossil fuel industry. The Sphere 500 Fossil-Free Index will not invest in companies whose main lines of business include producing, distributing, or refining fossil fuels, holding reserves of fossil fuels, utilities that are primarily fossil fuel-powered, and producers of equipment for any of the above. However, the fund may invest in companies that use fossil fuels as a part of their business or have used fossil fuels in the past. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Index returns do not reflect the effects of fees or expenses. It is not possible to invest directly in an index.

The performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. For the most recent month-end performance, please call 844-2-SPHERE or visit the fund’s website at https://www.oursphere.org/fund.

Index performance is discussed for illustrative purposes only as a benchmark for each strategy’s performance and does not predict or depict performance of that strategy. While index comparisons may be useful to provide a benchmark for a strategy’s performance, it must be noted that investments are not limited to the investments comprising the indices. Each of the strategy benchmark indices are unmanaged and cannot be purchased directly by investors. Past performance does not guarantee future results. No portion of the content should be considered a solicitation to buy or an offer to sell shares of the fund in any jurisdiction where the solicitation or offer would be deemed unlawful under the securities laws of such jurisdiction. The Sphere 500 Climate Fund is distributed by Ultimus Fund Distributors, LLC, member of FINRA and SIPC, which is not affiliated with Sphere or SPFFX. NOT FDIC INSURED NOT BANK GUARANTEED. MAY LOSE VALUE.