Big Tech Employees Missed Out on $5 Billion in Returns Due to 401(k) Fossil Fuel Investments, New Report Finds
Study spans 12 tech companies, including Amazon, Apple, Google, and Meta, and highlights financial risk from investments in high-carbon industries such as oil and gas
FOR IMMEDIATE RELEASE
MEDIA CONTACT: Sophia Wilson, [email protected], (341) 600-1832
BERKELEY, CA—APRIL 30, 2024—Today, researchers at the University of Waterloo (Canada), in partnership with As You Sow, released a new report finding more than 2 million employees from 12 tech-sector companies could have earned an estimated $5.1 billion in additional returns had their companies moved to decarbonize their retirement plan holdings 10 years ago. The report analyzed the 401(k) plans of the Big Five tech companies – Amazon, Apple, Google, Meta, and Microsoft – and seven additional tech companies: Adobe, Broadcom, Intuit, Netflix, Oracle, Qualcomm, and SAP America.
Despite these companies publicly announcing climate goals and often asserting climate-friendly branding, they continue to invest billions of dollars of employee savings into fossil fuels and other industries accelerating climate change. For example:
Google markets its “third decade of climate action” on its main landing page and clearly states on its sustainability landing page that it is critical to “track our progress and be transparent with what we’ve accomplished and where we’re going.”
Amazon encourages consumers to “discover and shop for more sustainable products” as part of its “Climate Pledge Friendly” program.
Apple’s 2030 plan commits to using “recycled and renewable materials, clean electricity, and low-carbon shipping” to bring its net emissions to zero.
Fossil fuel stocks have underperformed the broader stock market over the last decade and are an increasingly risky long-term investment. This underperformance means that employees have missed out on returns by remaining invested in fossil fuels.
“Investing in high-carbon industries is fueling the climate crisis and exposing investors to financial risk. These 12 companies have a responsibility to their employees, investors, and consumers, who want to see broad, consistent climate action,” said Andrew Behar, CEO of As You Sow. “Addressing the systemic risk of investing in high- carbon companies is a proven win-win strategy for companies looking to reduce their financed emissions while protecting their employees from climate-related financial losses.”
Looking at the fund options offered by 12 tech-sector retirement plans, the report estimated cumulative 10-year returns with and without fossil fuel energy sector investments and found a difference of +8.9%, or +0.86% per year invested in favor of fossil fuel-free portfolios. The funds analyzed were equity funds and target date funds, using data from company filings with the U.S. Department of Labor.
Nearly 50% of the assets analyzed were in target date funds from Vanguard and BlackRock, the world’s largest investors in fossil fuels. Both asset managers’ target date funds showed higher 10-year returns without fossil fuels. Target date funds are often used as the default investment option for corporate 401(k) plans, which means that many employees may be unknowingly investing in fossil fuels.
The lost potential returns per company analyzed in the report, over 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
“We know fossil fuels have underperformed over the last decade, so the results shouldn’t be surprising,” said Behar. “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. 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.”
In recent years, employees across the U.S. have mobilized to pressure their employers to take climate issues seriously. In 2023, nearly 2,000 members of Amazon Employees for Climate Justice staged a walkout demanding that Amazon stand behind its climate commitments and take responsibility for its climate harm. Employees at Microsoft also recently pushed their company to address the climate impacts of its retirement plan investments.
Similarly, investors in recent years have sought to hold companies accountable to addressing their climate impacts. To this end, As You Sow has filed shareholder resolutions at Amazon, Comcast, Microsoft, Campbell, FedEx, Intuit, and Alphabet, Google’s parent company. The Alphabet proposal highlights that investments in high-carbon and deforestation-intensive industries are poor long-term investments, particularly for younger beneficiaries whose retirement benefits are likely to be harmed due to climate-related financial losses. This proposal faces a vote at Alphabet’s annual general meeting this summer.
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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. Its issue areas include climate change, ocean plastics, pesticides, racial justice, workplace diversity, and executive compensation. As You Sow, also publishes monthly report cards rating mutual funds and retirement plans as part of its Invest Your Values initiative. Click here for As You Sow’s shareholder resolution tracker.