Finance & Investment Organizational Governance

Company Shareholders Vote to Examine More Climate-Beneficial Retirement Plans

Campbell's — and many other companies’ — current 401(k) options have employees investing millions in fossil fuels and deforestation through Vanguard, which has just announced it has left the Net Zero Asset Managers initiative.

Published 1 year ago | About a 4 minute read

Image: AlphaTradeZone

Last week, Campbell Soup Company shareholders voted on an As You Sow shareholder resolution asking the company to prepare a report assessing how Campbell’s retirement funds manage the growing systemic risk created by investing in companies contributing significantly to climate change. The proposal earned an 8.8 percent vote at Campbell’s annual general meeting, achieving the threshold needed to continue dialog with the company and resubmit the resolution next year, if necessary.

While Campbell’s has embraced strong climate goals — including a commitment to reduce its Scope 1 and 2 emissions by 42 percent by 2030, as well as commitments to reduce its deforestation impact — it continues to invest more than $130 million of employee retirement savings into fossil fuel companies and agribusinesses involved in deforestation. As concern over the impact of high-carbon investments gains momentum, companies such as Campbell’s must begin addressing their 401(k)s’ contributions to climate change or risk negative effects to their reputations, 401(k) plan returns, employees’ futures, consumer retention and employee goodwill.

“Employees want and need investment plans that reduce climate risk and impact,” said As You Sow President Danielle Fugere. “Now more than ever, employees want to save for retirement while leveraging their investor power to avoid climate destruction.”

While initiatives such as the Fossil Free Banking Alliance have emerged to help steer individual investors toward funds that more closely align with their values, employees tend to have less input into where their employers direct their retirement funds. Plus, many 401(k) plan fiduciaries have avoided taking climate risk into account in their 401(k) plans for fear of breaching their fiduciary duty. However, the Department of Labor last week released its long-awaited “Prudence and Loyalty" rule that empowers plan fiduciaries to safeguard the savings of US workers by clarifying that fiduciaries of employee retirement plans can consider material environmental, social and governance (ESG) risks when making investment and proxy voting decisions.

As is the case with many other companies, a substantial amount of Campbell’s 401(k) plan assets are currently invested in the default Vanguard target-date option — which has exposure to carbon-intensive industries and companies responsible for deforestation in the Amazon and Indonesian rainforests. These high-carbon investments not only have the potential to risk short-term returns but create significant risk for young employees' future retirements following decades of climate impact. And just today, Vanguard — which has long felt heat from activists and NGOs for lagging behind other asset managers in acknowledging the need to shift away from fossil-fuel investments — announced it has quit the Net Zero Asset Managers initiative, essentially dropping any pretense of a commitment to climate action.

A 2019 CDP report indicated 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, Campbell's does not currently offer any such options inside its 401(k) plan — but its lack of climate-safe retirement options is not unique. Investors have filed a similar shareholder resolution at Microsoft. While Microsoft is seen as an industry leader when it comes to climate goals and climate action, it, too, is investing more than $2 billion of employee savings into oil, coal-fired utilities and agribusinesses involved in deforestation. Investors will vote on the Microsoft resolution at the upcoming annual meeting on Dec. 13. As You Sow encourages Microsoft investors to vote at the upcoming Microsoft meeting by following the simple steps outlined in this shareholder voting guide. To learn more, read this press briefing.

As You Sow publishes monthly report cards rating mutual funds and retirement plans as part of its Invest Your Values initiative.