Do You Want Vanguard to Lose Four of Its Most Renowned Clients?

As the realities of climate change increasingly feature in the news, and weigh more and more heavily on the minds of American workers, ever greater numbers of those workers are demanding that their employers take decisive action on the most pressing issue of our time.

This is particularly true at companies which profess their progressive and climate-friendly credentials, such as the major players in the US tech sector. And these calls for increased sustainability apply not only to the companies’ operations, but where they are investing their employees’ retirement savings, too.

Big Tech workers want climate-safe 401(k) options

Over 70% of employees recently surveyed at Google, Microsoft, Amazon, and Oracle said that they are unhappy with the 401(k) options Vanguard currently provides. These employees of some of Vanguard’s biggest and most well-known clients said that they don’t want their retirement savings to fund the climate crisis. Yet, with Vanguard as their default fund provider, right now that simply isn’t an option.

In 2023, Vanguard's investment portfolio included a whopping $268 billion in fossil fuels, making it the largest global investor in this sector. And even the small number of Vanguard funds labeled as sustainable may still be exposed to fossil fuels, as the company admitted in a recent Australian court case.

The financial risks of fossil fuels

Not only are fossil fuels a disaster for the climate; they’re a risky investment too. The economic landscape is changing rapidly. Economists have projected that half of all the world’s fossil fuel assets could become worthless by 2036, as the world shifts towards renewable energy sources and governments tighten environmental regulations. This is hardly a recipe for the long-term stability desired in retirement investment products.

Even now, coal, oil and gas aren’t the safe investments they once were. Over the past decade, fossil fuel stocks have lagged behind the rest of the economy. A recent study examining the performance of Google’s Vanguard 401(k) found that Google employees could have earned an additional $1.15 billion in returns had their plan divested from fossil fuels ten years ago.

Vanguard employees: your role is crucial

The call from Vanguard’s clients for more sustainable 401(k) options is loud and clear. Employees at these four major tech firms are looking for investment opportunities that are in line with climate science, and contribute to a sustainable future. If Vanguard does offer such opportunities then it may lose these companies’ business altogether.

We appeal to you, Vanguard employees, to recognize your power in shaping your company’s future. Your job is your most powerful climate tool, and we need you to advocate for Vanguard to make its investments truly climate safe. By pushing internally for more environmentally sustainable investment practices, you can help to safeguard your job, your retirement savings, and our collective future.