Companies have beefed up sustainability pledges that span emissions reduction to clean-energy fleets to keeping plastic from clogging waterways, but too few take steps to make sure the 401(k)s their employees rely on for retirement are investing in Earth-friendly stocks.
With that in mind, sustainable investing advocate As You Sow released a new corporate 401(k) sustainability scorecard Tuesday, showing for now the corporate plan offerings of Amazon.comAMZN and Comcast Corp.CMCSA The tool, found here, will eventually include all listings from the S&P 500SPX.
Many of the broad index offerings, in particular, directly contradict publicly stated corporate sustainability goals on climate change and racial justice.
The investments tagged as “risky” by As You Sow were found primarily via the Vanguard Target Retirement Funds default options. For Amazon and Comcast this fund lineup held more than 50% of their plan assets. The Vanguard Target Retirement Funds also have significant investments in weapon companies and private prisons profiting from mass incarceration, which some investors may wish to avoid.
Online retail giant Amazon in 2019 set a goal to meet Paris Climate Agreement objectives 10 years early, with a pledge to be carbon neutral by 2040, even for its Prime one-day shipping service. It is the largest buyer of wind and solar power in the world.
“Amazon is working to address climate risk in their operations by purchasing 100,000 electric vehicles and powering their data centers with renewables. Given all of that work, it is very strange that Amazon employee’s savings are invested in companies literally burning down the Amazon rainforest,” said Andrew Behar, CEO of As You Sow.
“I’m sure when Jeff Bezos gazed down at planet Earth during his space junket and saw the Amazon Rainforest on fire, he did not say to himself, ‘I see that, our 401(k) plan must be making terrific returns.’ That’s the point, no one knows what investments they own or understands that we are profiting from our own destruction and adding risk to our portfolios,” Behar said.
Read: As Bezos completes Blue Origin mission, many ask what’s the climate-change impact?
Cable giant Comcast, in addition to its own blueprint for carbon neutrality for Scope 1 and Scope 2 emissions by 2035, has developed a comprehensive, multiyear plan to allocate $100 million to fight injustice and inequality against any race, ethnicity, gender identity, sexual orientation or ability.
MarketWatch asked Amazon and Comcast to comment on the investing tool’s findings, but that request had not yet been returned.
More than 100 million people are invested in retirement plans with assets exceeding $10 trillion, with much of it in funds managed by major asset managers like Vanguard, BlackRock
Fidelity and TIAA. In addition to Tuesday’s offering, As You Sow has built a suite of Invest Your Values tools that show investors what they own; some funds support justice and sustainability, others are invested in fossil-fuel extraction and risk.
“It’s all about education and transparency,” Behar told MarketWatch.
Not all the risks can be considered environmental risks alone. Investors should be privy to whether holdings include stranded assets, reputational risk and other negative impacts of unsustainable business practices that can destroy shareholder value, the investing advocate says.
Behar and others said the data increasingly show that returns do not have to be sacrificed for a sustainable retirement plan. A run of robust gains in technology shares has buffered ESG shares in part of late.
“We have decades of evidence showing a positive correlation between companies with strong environmental, social and governance [ESG] characteristics and financial return,” said Matthew Patsky, CEO of Trillium Asset Management, commenting on the As You Sow tool. “It is irresponsible and a clear violation of fiduciary duty for companies to not provide robust ESG options in their 401(k) plans.”
Read: Goldman Sachs launches an ESG ETF with a go-anywhere, any-size approach