As I reflect on 2023 and plan for 2024, a theme that keeps coming to mind is the immense climate impact that we can have when we pay attention to where we invest our retirement savings.
I started Sphere because of a personal experience: I wanted to offer a climate-friendly investment option to my team at Ayar Labs, and it took over three years to get a single climate-safe option on our 401(k).
What started as a quest to understand why it was so hard to get such a seemingly simple thing done has grown not only into a public benefit corporation named Sphere, but has also become part of a social movement together with thousands of others who want the same thing.
At the start of 2023 Joe Biden did the first veto of his presidential career. The topic? Climate-friendly investing in 401(k)s.
How did the topic of greening 401(k)s shift from the niche it was when I founded Sphere two years ago to the epicenter of a culture war just over a year later?
Money. The fossil fuel industry has poured money into a new war on ESG (Environmental, Social, and Governance-focused investing), getting politicians and newscasters to repeat, with impressive consistency, a simple statement: “You’ve got to choose between investing with your progressive values or investing for good returns.”
And it’s paid off.
Eighteen red states have passed laws in the past year or so outlawing climate-friendly investing in state pension plans, according to The Hill.
On top of that, a majority of the House and Senate voted to pass a bill whose purpose was to outlaw climate-friendly investing in 401(k)s across the country. That bill was only stopped by President Biden’s veto.
This, despite the clear data that shows climate-friendly investing has yielded better returns over retirement-length time frames. In fact, if you had invested $10,000 into a fossil-free portfolio ten years ago, you’d have $2,000 more today than if you had invested in the S&P 500.
This chart shows performance of the S&P 500 Index and the S&P Ex-Energy Index from 3/28/2013 to 3/31/2023.
It’s clear that fossil fuel companies are scared. Why else would they pour so much money into the topic of 401(k)s?
A few months ago, it occurred to my team to ask: just how scared are they? We calculated how much of the US fossil fuel industry's value comes from 401(k) investments. It turns out that number is 21%.
One fifth of the market cap of all US oil and gas companies comes from our retirement savings, according to our calculations.
Of course they’re scared.
Could it be that they’re scared that if our movement is successful, they risk losing the money regular Americans are forced to invest in them today?
2023 was a tough year for our movement. It felt like we moved backwards with a growing number of people believing that they have to choose between a livable planet and having enough money to retire with.
But 2023 also taught us that we have the power to change the status quo. Fossil fuel companies didn’t always have the power and influence they have today. They won’t always have that power in the future. And if they’re scared of us, that must mean we have some power and influence ourselves.
So 2024 will be the year of exercising our power and influence.
We’ll start by spreading the word – letting everyone in on the news that you can both save for retirement and have a healthy planet to retire on.
Then we’ll work together to get climate-friendly options on every retirement plan, focusing on our own spheres of influence: the organizations we work for.
To help on that first step and spread the word, go to retirebigoil.org and sign up to participate in the first ever virtual march, where anyone can participate from anywhere, taking place February 6-11. Once we’ve spread the word and grown our community of people who want the option to invest in a climate-safe way, we’ll coordinate our actions to mass-request climate-friendly options on every retirement investment platform and plan.
Join us: retirebigoil.org.
17783759-UFD 01/10/2024
