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Sample letter to email HR

Your Human Resources manager is one of the main decision makers for choosing which 401(k) options are available. Get the ball rolling by emailing them now.

Dear Benefits Manager,
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Can we please add a climate-friendly investment option to our 401(k) line-up? I'd like an option to invest our retirement savings without investing in fossil fuel companies, and to have the shares I own voted for a positive climate future. The inclusion of fossil fuel companies in our current plan options adds unnecessary risk and volatility to our holdings from a purely financial perspective.

In particular, I believe the Sphere 500 Climate Fund (SPFFX) is an affordable option that avoids fossil fuels and major contributors to deforestation. When the ~415 companies it invests in have shareholder votes related to climate change, the fund votes in the long-term economic best interest of shareholders, which aligns with taking climate action.
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The Department of Labor recently enacted new rules making it clear that climate-friendly investing is allowed in 401(k)s, and saying that employee preferences can be taken into account when choosing investment options for plan lineups. This may be a good time to revisit our investment options, given what a mission-driven company we are.

Best,

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Sample letter to your 401(k) provider

In a position of influence at a company that does not currently offer any climate-friendly investment options to employees? Use our template to request one today.

Dear 401(k) provider,

Can you please add a climate-friendly, and in particular fossil fuel-free, option to our 401(k) lineup? We would like to offer our employees a low-cost climate-friendly investment option so that they can choose to avoid the outsized risk and volatility associated with the fossil fuel sector.

I recommend a few resources that can help you review good options:

- fossilfreefunds.org - a website that provides visibility into how much fossil fuel company exposure mutual funds have. It is searchable by ticker. This website is run by the non-profit organization As You Sow.

- oursphere.org - the website of a public benefit corporation that provides financial products that are designed to make it easy for companies to offer climate-friendly investment options.

Please let me know what the next steps are.

Best,

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81% of people don't know they're invested in fossil fuels. Help them know.

If you’re active on social media, you can help spread the word on how to take real action on climate change while protecting your retirement savings. Check out our posts on Twitter and LinkedIn for the latest on climate-friendly investing in 401(k)s and 403(b)s.

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Frequently asked questions

Research has shown that there is no correlation between how a given fund has performed in the past and how it will perform in the future. That means that it doesn’t matter who you choose to manage your portfolio or how good they are at picking stocks - your best bet is to diversify your portfolio as much as possible and rely on the growth of the stock market at large for your returns. The US stock market has returned about 7-10% per year on average over the past 100 years. While the actual returns vary from year to year, that average rate compounded over your lifetime can result in some nice returns for you. The key is to consistently invest through the ups and downs of the market and steer away from trying to pick winning stocks (since their past performance is not correlated to future performance) but rather invest in a diverse portfolio of stocks and bonds (because research has shown that the most effective way to reduce the risk associated with investing in the stock market is to invest in a diverse selection of companies and industries.) Fossil fuel companies make up about 5% of the total stock market. In removing them, we increase our investments in the remaining 95% proportionally by market capitalization, resulting in a portfolio that largely follows the swings of the market. Several studies have shown that funds that are not invested in fossil fuel companies perform as well as or, in many cases, better than funds that are invested in fossil fuel companies. Projecting forward, fossil fuel company stock prices face uncertainty as carbon emissions standards and policies continue to roll out and increasing numbers of endowment and investment fund managers divest (i.e. remove their investments) from fossil fuel companies. The Financial Times wrote in July 2020 “With a growing business case, more than 450 asset managers, with $40tn in assets, have now signed up to an initiative called Climate Action 100+ to force the world’s biggest carbon emitters to tackle global warming. BlackRock joined the group in January.” These trends lead us to believe that past results (showing that fossil free funds have performed as well as or better than funds containing fossil fuels) will likely hold true in the future.

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SOURCES

Invest Your Values Methodology. (Updated monthly.) https://fossilfreefunds.org/how-it-works/

‍Climate Action 100+. (Retrieved October 6, 2020.) “Global Investors Driving Business Transition.” http://www.climateaction100.org/

The Climate Reality Project. (March 18, 2019.) “WHY IS 1.5 DEGREES THE DANGER LINE FOR GLOBAL WARMING?” https://www.climaterealityproject.org/blog/why-15-degrees-danger-line-global-warming

‍Carrel, Lawrence. (Feb 15, 2020). “Study Proves Past Results Don’t Predict Future Results,” Forbes. https://www.forbes.com/sites/lcarrel/2020/02/15/study-proves-past-results-dont-predict-future-results/#49f59e01633d

‍Royal, James and Arielle O’Shea. (September 10, 2020.) “What Is the Average Stock Market Return?” Nerdwallet. https://www.nerdwallet.com/blog/investing/average-stock-market-return/