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 to raise money to develop new coal, oil, and gas projects. Retirement plans invest employee savings in those bonds.
The International Energy Agency has warned that there can be no new coal, oil, and gas development if humanity wants to prevent dangerous warming.
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.
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.
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.
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.
| Bond | Equity | |
|---|---|---|
| Avg. fossil fuel exposure | 0.5% | 6.2% |
| Avg. fossil fuel concentration | 15% | 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.
Adobe
Airbnb
Amazon.com
Apple
Bloomberg
Booking Holdings
Broadcom
Campbell Soup Company
Centene Corporation
Chevron
Chipotle Mexican Grill
Comcast
Disney
Dollar General
Duke University
Etsy
FedEx
Google
Intuit
Keurig Dr Pepper
Meta
Microsoft
Monster Energy Company
Netflix
Oracle
O'Reilly Automotive
Pinterest
Progressive
Prologis
Qualcomm
Quanta Services
Regeneron Pharmaceuticals
State Farm
Stryker
Sutter Health
Take-Two Interactive Software
Target
Tesla
TJX Companies
Twitter
Vertex Pharmaceuticals
VISA
Whole FoodsTarget 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 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.
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.
Sign up for updates
We'll let you know when we add new companies, new funds, and new features.
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.
We offer sustainable investment tools that highlight issues dealing with climate change, gender equality and more
Invest Your Values is funded by contributions to As You Sow, a non-profit 501(c)3.
Invest Your Values is a project by As You Sow, a 501(c)3 nonprofit empowering shareholders to change corporations for good
Main Post Office, PO Box 751, Berkeley, CA 94701
Connect with As You Sow
Disclaimer: As You Sow is not an investment adviser
See our full disclaimer