Thanks in part to the actions of 8,400 Green Americans, Google has now added a fossil-free fund to its 401(k) plan!
The new addition is the Parnassus Core Equity Fund, which has no direct fossil fuel holdings. The fund started in 1992 with the aim of outperforming the S&P 500 index through a portfolio of 40 high-quality large-cap stocks selected for their growth potential and business resiliency.
This move by Google came after a report by the University of Waterloo and As You Sow showing that Google employees could have earned an estimated $1.15 billion in additional returns if their retirement plan had divested from fossil fuels 10 years ago.
The report analyzed Google’s employee 401(k) plan, estimating cumulative 10-year returns with and without fossil fuel investments, and found a difference of 9.15%, or 0.879% per year invested, in favor of fossil free portfolios.
Shortly after the report, Google employees mobilized to ask their company to add fossil-free options to their retirement plan.
“While Google has made progress towards net zero, Google’s 401(k) retirement plan is not yet climate safe,” reads a letter to management signed by more than 1,000 employees. “Google has the
opportunity to be a climate leader, and employees are ready for a retirement plan that aligns with their values, our organizational commitments, manages climate risk, and helps achieve a net zero
future.”
In tandem with a push from employees inside Google, Green America and other coalition groups organized letters from tens of thousands of consumers through the Google Fix Your Funds campaign, asking the company to offer fossil-free options.
A great start, but more must be done
Google has now added one fossil-free option to its retirement plan portfolio. One is not enough, but most 401(k) plans offer NO fossil-free options. Nationwide, workers are unknowingly investing an estimated $320 billion in fossil fuel companies through their 401(k) plans.
If we add pension funds and Individual Retirement Accounts (IRAs) to the mix, American workers are putting an estimated $870 billion into fossil fuel companies each year!
As a $2 trillion company with over 183,000 employees, Google has a responsibility to offer a sustainable retirement plan. Adding the Parnassus Core Equity Fund is a great start, but there is more Google could do.
Google should offer socially responsible options in all asset classes so that employees who want to invest for their retirement with 100% sustainable funds can do so.
Google should also make a sustainable target date fund series, or a another set of fossil-free funds, its default choice for employees who do not designate where their investments should go.
Currently 66% of Google plan assets are held in the company's default option, the Vanguard Target Date Retirement Fund series, which ignore climate change as an investment factor. Vanguard is the world's No. 1 investor in fossil fuels, at $444 billion in 2024.
While adding a fossil-free fund a great step forward for Google, the company must do more to address the climate crisis, by drastically reducing the financed emissions of their employee retirement plan.
