Shareholder Pressure Mounts: Protecting Employee Financial Futures in the Era of Climate Risk Takes Center Stage
Will companies listen to shareholders and protect their employees’ life savings from the economic costs of climate change?
FOR IMMEDIATE RELEASE
MEDIA CONTACT: Stefanie Spear, [email protected], 216-387-1609
BERKELEY, CA—MAY 24, 2023—Amazon, Netflix, and Comcast shareholders will soon vote to ask companies how they are protecting employees from climate risk stemming from their retirement plan investment options. Climate change poses a material risk to retirement plan beneficiaries, especially younger employees, yet many companies are not actively addressing this risk, exposing not only their employees’ life savings to the economic consequences of climate change, but also risking their own reputation on climate action.
Amazon, Netflix, and Comcast have each made net-zero commitments for their operations and value chains yet are, at the same time, investing billions of employee dollars into fossil fuels and companies responsible for rainforest destruction. Not only do these companies’ 401(k) plans carry carbon-intense investments that directly undermine the company’s own climate commitments, but also risk tarnishing the companies’ reputations on climate. In all three of these plans, more than half of worker-contributed wages are invested in target date funds that are heavily exposed to high-carbon and deforestation-intensive industries. These investments contribute to climate change and create outsized systemic portfolio risk for beneficiaries. They are also poor long-term investments for younger beneficiaries; high-carbon industries are likely to face significant and growing transition costs and decarbonization risk.
“Climate change threatens workers’ life savings,” said As You Sow President Danielle Fugere. “Companies must extend the same duty of care toward safeguarding their employees' financial futures from climate risk as they exercise in their operational practices — this requires a plan for reducing investments in the activities and industries that are contributing to climate change.”
These shareholder resolutions are part of a growing investor movement to raise awareness and promote sustainable investing practices that support a transition toward a low-carbon economy.
Carbon-intense investments may also create litigation risk. An employee in Australia recently filed a lawsuit against his employer, claiming the company’s pension fund did not adequately disclose or assess the effect of climate change on its investments. Since investing in high-carbon companies that contribute to climate change may reduce the long-term value of retirement funds, it may only be a matter of time until U.S. employees pursue similar litigation.
We are in the midst of the largest generational transfer of wealth, with Millennials expected to inherit close to$16 trillion by 2033 and $84 trillion by 2045. Considering 99% of millennials are interested in sustainable investing and already make up a majority of the workforce, companies attempting to attract and retain top talent need to pay attention to demand for sustainable investments. An overwhelming majority of consumers, too, expect corporations to address their impacts on the climate and, especially among younger consumers, are prepared to enforce that expectation with their purchasing power.
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 representative, 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.