Microsoft Shareholders Vote on Climate-Safe Retirement Plans

Climate contradiction persists: $1 billion invested in climate innovation and $2 billion in oil, coal-fired utilities, and deforestation 

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MEDIA CONTACT: Stefanie Spear, [email protected], 216-387-1609

BERKELEY, CA—DEC. 19, 2022—Microsoft shareholders voted on an As You Sow resolution asking the company to disclose how the company’s 401(k) retirement funds manage the growing systemic risk created by investing in companies contributing significantly to climate change. The proposal earned an 11.2% vote last week at Microsoft’s annual general meeting, achieving the threshold needed to continue dialog with the company and resubmit the resolution next year, if necessary.

While Microsoft has adopted ambitious climate goals, including a commitment to become carbon negative by 2030 and invest $1 billion in a climate innovation fund, the company’s retirement plan is quietly directing more than $2 billion of employee savings into oil, coal-fired utilities, and agribusinesses involved in deforestation, thus creating cognitive dissonance, reputational risk, and exposing employees' savings to climate-related financial risk.

“Our polling shows that more than 70% of employees want to invest sustainably to assure a livable planet when they retire,” said As You Sow CEO Andrew Behar. “We are pleased to see Microsoft demonstrating climate leadership by backing up its climate goals with real action. However, forcing its employees to unwittingly invest $2.3 billion in fossil fuel companies and $109 million in deforestation-risk agribusiness raises the question of whether Microsoft is increasing climate risk in violation of the fiduciary duty owed to its pension fund beneficiaries. We are asking for a report to examine how Microsoft can reduce its employees' short and long-term climate risk while avoiding negative brand impact.”

Many 401(k) plan fiduciaries have mistakenly avoided taking climate risk into account in their 401(k) plans for fear of breaching their fiduciary duty. However, the Department of Labor (DOL) recently released its long-awaited “Prudence and Loyalty" Rule that empowers plan fiduciaries to safeguard the savings of America's workers by considering material environmental, social, and governance (ESG) risks when making investment and proxy voting decisions.

A substantial amount of Microsoft’s 401(k) plan assets are held in the BlackRock LifePath Index series funds, which have significant exposure to high-carbon industries that exacerbate the climate crisis and create systemic risk to the economy. A report from the Carbon Disclosure Project indicates that 215 of the largest global companies report almost $1 trillion at risk from climate impacts, with many losses to hit within the next five years. Climate change also threatens workers’ life savings. Despite employee demand for climate-safe investment options, the company does not currently offer any such options inside its 401(k) plan. 

“Employees at Microsoft have been asking for better, climate-safe investment options from the company for years,” said Maren Costa, a design lead at Microsoft. “It's about time the Microsoft board and management agrees that offering employees investments aligned with their values inside our 401(k) plan is in everyone's best interest.” 

Rather than addressing growing employee concern about climate change across its full range of investment options, the company offers a difficult-to-use alternative of a self-directed option, which charges additional fees, and outsources investment risk to employees.

“This shareholder resolution and others like it are part of a growing investor movement demanding the world’s largest asset managers act on climate risk,” said David Pinsky, a senior strategist at WorkforClimate, a platform that helps employees make a positive impact at their corporation. “To truly uphold their fiduciary responsibility, BlackRock and Vanguard must embrace the transition to a clean energy economy and immediately offer customers climate-safe investments. Microsoft employees’ hard-earned savings don’t need to fuel the climate crisis, and BlackRock should be protecting its clients by investing in the climate transition.”

As You Sow, a nonprofit corporate accountability organization, publishes monthly report cards rating mutual funds and retirement plans as part of its Invest Your Values initiative.

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As You Sow is the nation’s leading shareholder advocacy nonprofit, with a 30-year track record promoting environmental and social corporate responsibility and advancing values-aligned investing. Its issue areas include climate change, ocean plastics, pesticides, racial justice, workplace diversity, and executive compensation. Click here for As You Sow’s shareholder resolution tracker.