If you’re invested in an employer-offered retirement plan



Core concepts

Retirement planning can be overwhelming and confusing, whether you are a first-time investor or if have been saving for your entire career. Below is a review of some of the core concepts of retirement planning to give you a better understanding of how it works today. If you want more details, click on the concepts to learn more.


Types of retirement plans

Types of retirement plan options


Understanding the process

Now that you have a better understanding of the types of retirement plans and plan options, let’s take a quick look at how the process works. In the infographic below, the left side outlines the steps when signing up for a new retirement plan, and the right details the administrative side of the plan.


Steps and people involved in your retirement plan

Steps and people involved in your retirement plan



401(k) flow chart: An example

401(k) flow chart: An example


How to make sure your retirement plan is sustainably invested

Now that you have a better understanding of the retirement system, let’s take a look at how to invest sustainably in your retirement plan. We have outlined some steps below on how to find out if your retirement savings are invested sustainably. If they are not, we also demonstrate how you can help your employer add sustainable investment options to the company retirement plan.

1
Find out what you are invested in

In order to know if you’re investing sustainably, you have to know what you own. Finding out what retirement plans and mutual funds are investing in is not obvious, but you can get some info on them with a few steps.

First, to find out what funds are available to you, you should be able to visit your employer’s online retirement plan portal. (If your employer has had their retirement plan rated by our sustainability scorecard, you can also see the list of plan options there.)

Once you have the names of the funds offered by your plan, you can do a free search for the sustainability ratings of each fund using our mutual fund sustainability databases. Start with an issue that you care about the most:

Each mutual fund database is interlinked with the others, so you can always see all seven environmental and social ratings for a fund.

If you found out that none of your retirement plan options are sustainably invested, you can try to get your employer to add sustainable investments to the fund line-up. The best way to accomplish this is to work together with your colleagues.

2
Talk to your colleagues and build a coalition

To effectively advocate for new offerings in your employer-sponsored plan, first build a coalition of peers and interested co-workers inside your company. Your voice will be much stronger as a group. If you’re writing to someone in power, advocating on behalf of 10 or even 20 people carries a lot more weight than just one.

One way to spur interest would be to share the results from our tools with your fellow employees. All plan participants are offered the same basket of mutual funds as you are, so they are probably asking the same questions are you are right now.

Some companies have “green teams,” and there may be affinity groups for women or LGBT employees. If there isn’t one already, it may be time to create one for climate change. Communicate this idea with your co-workers through a company intranet, employee portal, a company newsletter, corporate chats, or social media.

3
Identify the best people to speak with

The 401(k)/403(b) plan administrator, manager, or coordinator should be known if you are a plan participant, and that’s where to start. There could also be a chief sustainability officer or employee engagement manager, and those could be good resources.

An effective method is to go to the LinkedIn pages of those people and find who might have some sympathy for the cause. Do any of them volunteer or have connections with organizations concerned with climate change? Look for indicators that they’re friendly to sustainability and start contacting them in order of their friendliness.

In a publicly listed company with more structure, talking to the right people is important, and a coalition is vital to signal to managers that it’s an important issue for many employees. If it’s a smaller company, the CFO or CEO could be approached directly.

4
Bring a solution to the table

The usual starting point in these conversations is: “We want to reduce the sustainability risks of our 401(k) fund choices. We also want to invest in an economy that is based on justice and sustainability. How can we enhance our 401(k) choices to do so?”

Share our plan administrator resources with your employer. This page explains the company benefits of making the retirement plan sustainable, lays out the solutions, and addresses commonly concerns.

Getting new fund choices added to the list of the existing plan options is a formal process, and could take up to a year to be added. Larger companies often have some form of investment committee, which engages an investment advisor.

If the investment advisor and plan administrator refuse to help, you may need to get fellow employees to sign a petition requesting the change and send it to the investment committee. If you are told, “But you’ll make less money if you’re not invested in sectors like fossil fuels,” you can say, “Actually, unsustainable industries are risky investments. We want to reduce our risk, and help build a regenerative economy that is based on justice and sustainability.”

5
Keep pushing

Your plan administrator may not be responsive the first time you ask about sustainable investments. Be persistent – continue giving updates to your colleagues that you’ve organized, and keep raising the issue with the plan administrator. The most important thing to hammer home is that unsustainable investing carries real financial risks like stranded assets and reputational risk. Without sustainable investment options, plan participants are forced to assume those financial risks, which may be a violation of your retirement plan’s fiduciary duty.


WHY OFFERING SUSTAINABILITY MATTERS
Unsustainable investments carry financial risk

The financial risks of investing unsustainably, like stranded assets, reputational risk, and other negative impacts of unsustainable business practices can destroy shareholder value.

The goal of sustainable investing is to avoid financial risks while supporting the transition to a regenerative economy that is based on justice and sustainability.

Learn more





Sample letter to plan administrator

Dear Plan Administrator,

I am an employee of [Company Name], and I participate in our company retirement plan. I am writing to ask about environmentally and socially sustainable investment options in the plan.

I am concerned about the financial risks associated with investing my retirement savings in unsustainable industries. For example, laws curbing the use of fossil fuels are being put in place, energy efficiency measures are being implemented across nearly every sector of the economy, and renewable energy is driving down demand for fossil fuel-based energy. These changes pose substantial financial risk to fossil fuel companies. One example of this growing risk: over the past five years, the largest U.S coal companies have gone bankrupt, while other U.S. based coal firms have lost nearly 90% of their stock value.

I believe it is my right to know what companies my retirement savings are invested in. Can you please tell me how I can find out what companies are held in each of the investment options offered in our company plan? Does our retirement plan offer any fossil free, sustainable investment options? Is the default option of the retirement plan a sustainable investment?

Sustainable investing is no longer just an ethical issue. It is a key factor impacting financial well-being. New guidelines from the Department of Labor state that “environmental, social, and governance factors may have a direct relationship to the economic and financial value of an investment” and can be used when making decisions related to fiduciary duty.

Thank you in advance for looking into this. I appreciate your time and look forward to hearing from you.

Best,

[Your Name]

[Your contact information (company department, email, phone)]


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Action center

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Disclaimer: As You Sow is not an investment adviser

As You Sow is not an investment adviser as that term is defined under federal and state (California) laws and regulations. As You Sow is a tax-exempt, nonprofit organization dedicated to educating and empowering shareholders to change corporations for the good through the collection, analysis and dissemination of relevant information to the public, free of charge. As You Sow does not provide financial planning, legal or tax advice. Nothing on this website shall constitute or be construed as an offering of financial instruments, or as investment advice or investment recommendations.
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