Over two million employees reportedly missed out on billions in retirement savings because their employer failed to move to sustainable investing, finds new research by corporate social responsibility non-profit As You Sow.
The findings, in conjunction with researchers at the University of Waterloo, analyzed the 401(k) plans of 12 tech-sector companies, and found that employees could have earned an additional $5.1 billion in savings had the companies choose to decarbonize their retirement investments.
The research studied the 10-year returns of equity and target-date funds (TDFs) within the top five largest tech companies, comprised of Amazon, Apple, Google, Meta, and Microsoft, along with leading businesses like Adobe, Broadcom, Intuit, Oracle, Qualcomm, and SAP America. It found a difference of +8.9% or +0.86% per year, in favor of portfolios without fossil fuels.
As You Sow also points out that nearly 50% of the assets analyzed were TDFs from Vanguard and BlackRock and showed a higher 10-year return without fossil fuels.
According to the findings, the lost potential returns per company over the past 10 years amount to (in millions of dollars):
- Adobe Inc. 401(k) Retirement Savings Plan: $129
- Amazon 401(k) Plan: $570
- Apple 401(k) Plan: $476
- Broadcom U.S. 401(k) Plan: $207
- Google LLC 401(k) Savings Plan: $1,152
- Intuit Inc. 401(k) Plan: $89
- Meta Platforms, Inc. 401(k) Plan: $304
- Microsoft Corporation Savings Plus 401(k) Plan: $898
- Netflix 401(k) Plan: $46
- Oracle Corporation 401(k) Savings and Investment Plan: $719
- Qualcomm Incorporated Employee Savings and Retirement Plan: $230
- SAP America, Inc. 401(k) Plan: $271
In its report, As You Sow accuses companies of greenwashing, adding that while the organizations have touted climate goals, their investments into fossil fuels paint a different picture of their climate position. For example, it calls out Amazon’s “Climate Pledge Friendly” program that promotes customers to shop for sustainable products, along with Apple’s 2030 plan to use “recycled and renewable materials, clean electricity, and low-carbon shipping” to bring down net emissions.
In a statement, Andrew Behar, CEO of As You Sow, called on the big tech firms to work with asset management companies in adopting sustainable investment strategies.
“What’s surprising is that nearly every retirement plan is invested in the extractive economy, which runs counter to the values of the people who earn the money while reducing their retirement savings,” he said. “The solution is very simple: big tech companies could easily ask asset management firms like Vanguard and BlackRock to offer sustainable target date and index fund options so their employees can avoid these underperforming and risky holdings.”
A 2024 Cerulli Edge report found that more institutional investors, asset managers, and asset owners are moving towards net-zero goals, as more look to reduce their climate footprint. In fact, respondents to Cerulli’s report are increasingly moving away from investing in coal, gas, and oil companies, as half of the institutions surveyed said they would either be divesting (29%) or planning to divest (21%) from fossil fuel funds.
SEE MORE:
- Institutional Investors, Asset Managers, Shift to Net-Zero Targets
- Climate-Friendly Initiative Aims to Retire Big Oil in 401(k)s
- U.S. Asset Managers Differ on Environmental, Social Impacts
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
