Climate change comes with serious financial risks, and those risks could affect your retirement account. Is it up to your employer, then, to protect your 401(k) from those concerns?
That’s the question posed by a first-of-its-kind lawsuit, filed today in the U.S. District Court Western District of Washington.
A former employee of Cushman & Wakefield has filed a lawsuit alleging that the real estate company breached its duties under the Employee Retirement Income Security Act (ERISA) by failing to protect its workers’ 401(k) savings from climate-related financial risks.
“Though often misrepresented as a purely ethical issue, climate risk is actually a severe economic risk,” said Kimberly Blake, attorney at ClientEarth USA, which is representing the plaintiff, in a statement. “You cannot claim to be a prudent fiduciary while ignoring the biggest systemic threat to the global economy.”
Called Kvek v. Cushman & Wakefield, the complaint could have far-reaching implications for the country’s $12 trillion retirement market.
If successful, climate experts say, the lawsuit would mean that both asset managers and employers can no longer ignore the economic costs of climate change, and that they have a duty to invest retirement savings with that consideration.
Climate financial risks
Climate-fueled disasters can disrupt supply chains, damage infrastructure, and devalue investments—partcuarly those in fossil fuels.
There’s a high likelihood that at least some of your retirement savings are invested in fossil fuels. Nearly one fifth of all U.S. fossil fuel stocks are owned by American’s retirement savings accounts, according to one estimate.
But thousands of oil and gas assets are at risk of becoming stranded, because future climate change policies could make them unprofitable or even force them to shutter early.
Some workers have said they’ve already missed out on billions of dollars in 401(k) returns because their accounts were invested in fossil fuels.
A 2024 As You Sow report found that more than two million employees from 12 tech-sector companies, including Amazon, Google, Adobe, and more, could have earned an estimated $5.1 billion in additional returns had their companies decarbonized their retirement plan holdings 10 years ago.
A “bad financial bet” to invest in fossil fuels
Decarbonizing investment accounts has been a growing movement over the past decade. Also called divesting, the idea is to get pension plans, school endowments, and other assets under management to remove all fossil fuel investments from their portfolios.
To some, divesting from fossil fuels is a moral imperative: People may not want to support coal companies or deforestation practices through their 401(k) contributions.
But it’s also a financial one: It’s become “really clear in the data that it’s a bad financial bet to invest in the fossil fuel sector,” Heather Coleman, environment program director with Wallace Global Fund, told Fast Company in 2021.
“Climate risk isn’t just about fossil fuel stocks or coastal real estate,” Blake notes in a statement: “It’s a broad, interconnected threat that touches huge parts of the economy.”
In 2025 alone, climate-fueled disasters caused the United States $115 billion in damages. Every 1 degree Celsius of warming, one report found, costs the world 12% in GDP losses.
The lawsuit could be a “pivotal turning point”
Banks are aware of, and are attempting to manage, these climate-related financial risks.
So are businesses like Cushman & Wakefield—which has said, according to the lawsuit, that “[w]ith assets increasingly exposed to rising sea levels and flooding, and challenges like extreme and unseasonal weather patterns, real estate professionals cannot afford to ignore climate change.”
“The Company well knew,” the lawsuit continues, “that prudent financial stewardship and climate risk considerations went hand in hand.”
And yet, it alleges, the company’s retirement plan fiduciaries ignored, or failed to evaluate, this concern.
“What’s striking here is that Cushman & Wakefield understood these risks in its own business operations, but it failed to protect its workers’ retirement savings from the same dangers,” Blake said.
A spokesperson from Cushman & Wakefield told Fast Company that it plans to fight the lawsuit.
“This claim is a variation on widely asserted legal theories that have been prevalent for many years,” the spokesperson said in a statement. “We have thoughtful processes in place that are designed to give our plan participants a variety of prudent investment options. Once served, we will appropriately defend this case.”
The lawsuit concerns one particular fund, alleging that Cushman & Wakefield failed to “evaluate, monitor, and remove the Westwood Quality SmallCap Fund, which exposes retirement savers to dangerous levels of climate-related financial risk while at the same time underperforming and charging unreasonably high fees,” according to ClientEarth.
“When your employer offers you a set of retirement options, you assume they’ve done the work to make sure those options are sound. You pick a fund, you contribute every month, and you trust that someone is paying attention to the risks,” Renee Kvek, lead plaintiff and former employee for Cushman & Wakefield, said in a statement.
If successful, though, the lawsuit could have implications for retirement accounts beyond that one fund.
“Retirement savings are workers’ deferred wages. They represent decades of labor and trust in a system that is supposed to protect their future,” Amy Gray, Stand.earth climate finance associate director, said in a statement. “This case could be a pivotal turning point in how courts, companies and retirement funds view climate risk, and prove that protecting retirement security isn’t political. It’s responsible.”