Fossil Fuel Bonds in 401(k)s

Retirement plans don't just invest in stocks of high-carbon companies. They also hold corporate bonds issued by those same companies. Corporate bonds are one of the main ways fossil fuel companies raise money to expand their operations.

If there are fossil fuel bonds in your 401(k), you're effectively lending your retirement savings to companies so they can mine for coal and drill for oil.

The bond problem

Fossil fuel companies issue bonds

Fossil fuel companies issue bonds to raise money to develop new coal, oil, and gas projects. Retirement plans invest employee savings in those bonds.

There can be no new coal, oil, and gas development

The International Energy Agency has warned that there can be no new coal, oil, and gas development if humanity wants to prevent dangerous warming.

Savers face the risk of climate-related financial losses

Those who have invested in fossil fuel companies, including people who have purchased the companies’ stocks or bonds, face the risk of climate-related financial losses.

Key findings

As many banks start to limit their lending to carbon intensive industries, companies in the coal, oil, and gas value chain are turning more to the bond market to access cheap debt. Every time retirement plan participants invest in fossil fuel corporate bonds, they are helping new coal plants, new oil and gas pipelines, and other new fossil fuel infrastructure get built.

Invested in fossil fuel bonds by default
Few climate-safe bond fund options
Employees closer to retirement are more at risk of fossil fuel bond exposure
Higher fossil fuel concentrations in bonds than stocks

Retirement plans

While retirement plans have lower exposure to fossil fuel bonds than fossil fuel stocks, the concentration of fossil fuels is higher within corporate bond holdings than within stocks.

Retirement plans - 401(k)s & 403(b)s

In U.S. 401(k)s and similar retirement plans, any given dollar invested in corporate bonds is almost twice as likely to be fossil fuel compared to a dollar invested in stocks.

Fossil fuel stocks and bonds in 401(k)s

Exposure: The percentage of plan assets invested in fossil fuel bonds or fossil fuel stocks. Most plans have over 10 times more invested in fossil fuel stocks than fossil fuel bonds.

Concentration: The percentage of plan assets classified as fossil fuel within each asset class. In other words, for most retirement plans, a dollar invested in corporate bonds is about twice as likely to be fossil fuel compared to any given dollar invested in stocks.

Figures in the chart and table represent the average of the 43 retirement plans analyzed below.

BondEquity
Avg. fossil fuel exposure0.5%6.2%
Avg. fossil fuel concentration15%8.6%

With $9.3 trillion invested in U.S. 401(k)s and similar retirement plans, an average fossil fuel bond exposure of 0.5% would amount to an estimated $46.5 billion invested in fossil fuel bonds by U.S. defined contribution plan participants.

Use the dropdown or click a row on the table to see details on how much that retirement plan has invested in fossil fuel bonds and stocks, as well as details on each plan option.

Select a plan
×
 
Fossil fuel bonds
Employer
Investments
Exposure
Concentration
AdobeAdobe
$22.85M
0.67%
15%
AirbnbAirbnb
$1.56M
0.34%
14%
Amazon.comAmazon.com
$71.08M
0.41%
15%
AppleApple
$80.91M
0.51%
17%
BloombergBloomberg
$16.05M
0.36%
18%
Booking HoldingsBooking Holdings
$1.29M
0.33%
14%
BroadcomBroadcom
$27.32M
0.37%
14%
Campbell Soup CompanyCampbell Soup Company
$9.39M
0.45%
13%
Centene CorporationCentene Corporation
$21.06M
0.58%
18%
ChevronChevron
$91.24M
0.48%
16%
 
Fossil fuel bonds
Employer
Investments
Exposure
Concentration
Chipotle Mexican GrillChipotle Mexican Grill
$987,529
0.5%
14%
ComcastComcast
$100.66M
0.57%
15%
DisneyDisney
$71.19M
0.56%
17%
Dollar GeneralDollar General
$4.52M
0.69%
15%
Duke UniversityDuke University
$35.97M
0.43%
14%
EtsyEtsy
$505,552
0.4%
14%
FedExFedEx
$191M
0.8%
16%
GoogleGoogle
$176.06M
0.6%
15%
IntuitIntuit
$16.55M
0.64%
14%
Keurig Dr PepperKeurig Dr Pepper
$12.02M
0.7%
14%
 
Fossil fuel bonds
Employer
Investments
Exposure
Concentration
MetaMeta
$23.65M
0.33%
14%
MicrosoftMicrosoft
$134.58M
0.3%
15%
Monster Energy CompanyMonster Energy Company
$1.03M
0.68%
16%
NetflixNetflix
$5.35M
0.41%
14%
OracleOracle
$81.45M
0.37%
14%
O'Reilly AutomotiveO'Reilly Automotive
$5.98M
0.41%
18%
PinterestPinterest
$994,557
0.39%
14%
ProgressiveProgressive
$27.6M
0.36%
14%
PrologisPrologis
$1.52M
0.44%
13%
QualcommQualcomm
$24.74M
0.35%
11%
 
Fossil fuel bonds
Employer
Investments
Exposure
Concentration
Quanta ServicesQuanta Services
$8.88M
0.63%
19%
Regeneron PharmaceuticalsRegeneron Pharmaceuticals
$5.02M
0.3%
13%
State FarmState Farm
$134.02M
0.76%
14%
StrykerStryker
$34.1M
0.69%
14%
Sutter HealthSutter Health
$42.07M
0.67%
18%
Take-Two Interactive SoftwareTake-Two Interactive Software
$1.07M
0.26%
14%
TargetTarget
$60.05M
0.44%
15%
TeslaTesla
$2.78M
0.24%
18%
TJX CompaniesTJX Companies
$18.11M
0.6%
14%
TwitterTwitter
$1.43M
0.24%
16%
 
Fossil fuel bonds
Employer
Investments
Exposure
Concentration
Vertex PharmaceuticalsVertex Pharmaceuticals
$6.03M
0.66%
16%
VISAVISA
$23.63M
0.67%
16%
Whole FoodsWhole Foods
$12.38M
0.67%
14%



Target date fund series

Many 401(k)s are based around target date fund series as the default investment option. Select a target date series to see how much it has invested in fossil fuel bonds and stocks across the different dates.

2025 fund for all series
×
Target date funds

2025 FUNDS OF POPULAR TARGET DATE SERIES

 This chart compares 10 popular target date series using the 2025 fund. Those towards the top of the chart have more fossil fuel exposure in the 2025 fund, and those towards the bottom have less exposure. The 2025 fund is used for the comparison as it is more bond-heavy, being marketed to people who are nearing retirement.

* To see the figures for these charts, download the dataset in the methodology section.

Recommendations

The steps retirement plan administrators should take to address the risk of fossil fuel corporate bonds in their plans are similar to the steps they should take to address the risk of fossil fuel stocks. It is the responsibility of every company to ensure that the retirement plan offers sustainable investments.

Add climate-safe bond funds
Reduce climate risk of corporate bond holdings in default option
Engage asset managers


Questions?

If you have questions about your company's retirement plan, get in touch.

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Methodology


Download dataset


The results above are based on an analysis of the holdings of mutual funds found in retirement plans of major companies, as well as popular target date funds series used as the default investment option in hundreds of other retirement plans.

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