Happy Earth Day Friends and Family!
This Earth Day stok is proud to announce the creation of the first ever fossil fuel free 401(k) portfolio plan with 5 risk-based diversified push-button portfolios. We are joining Divest Invest’s campaign calling for fossil free 401(k) options to be offered by all employers.
The fossil fuel divestment movement is gaining momentum. The world’s largest foundations, endowments, and pension funds are taking action to address the financial risk associated with owning shares of short-term, profit-driven fossil fuel companies in long-term investment portfolios. U.S. Secretary of Labor Thomas E. Perez has issued new guidelines which include consideration for environmental risks and has stated that, “investing in the best interests of a retirement plan and in the growth of a community can go hand in hand.”
For stok, the move towards fossil fuel divestment started a few years ago when participation in our 401(k) plan was at an all-time low. When stok team member Warren Neilson was asked why he wasn’t participating in the company’s 401(k) plan his answer was simple: “I spend my days working towards a regenerative future for our partners and my family. It doesn’t make any sense for me to turn around and invest my hard earned money into business models that are destroying the future we’re co-creating.”
This problem of low 401(k) participation has a real financial impact on employers. Aside from attracting talent, a main driver for company sponsored 401(k) plans, and matching contributions, is the safe harbor tax savings they can provide. However, when employees don’t participate employers can lose the tax benefits of the plan. A fossil free 401(k) is an exciting way to increase employee engagement and create financial value potential for employers.
The journey to creating a fossil free 401(k):
Step 1: Full transparency into retirement savings
To achieve transparency into investment portfolios, stok partnered with HIP Investor to apply their HIP Rating System to all the investments in stok’s company sponsored retirement plans. The HIP Rating System provides indicators of future risk and return potential based on an investment’s human, social, and environmental impacts. In our search for sustainable investment options, we weren’t able to find the same type of forward-looking investment insights that HIP provides from traditional 401(k) plan providers or rating systems.
Step 2: Out with the bad, in with the good
Once there was full transparency into the investment options, we then teamed up with our partners at Communitas Financial Planning, QBOX, & Matrix. Through this collaboration, low scoring funds were replaced with funds that both matched or exceeded traditional historical performance indicators (which look backward) and scored higher on future-looking social and environmental impacts, which link to future risk (and look forward).
Step 3: Full plan participation
Partnering with HIP resulted in 100% plan participation; that’s a big jump from the previous 14% engagement rate.
Looking for more…
When informed about the plan’s success at an annual stok meeting, team member Kristen Magnuson – inspired by a recent speech given by the founder of Divest Invest – was excited but wanted more, stating, “I want to have a fully fossil fuel divested 401(k). How can I make this happen?” With this renewed direction, we went back to our partners and challenged them to push even further. And voila – five fossil fuel free push-button portfolios in our 401(k) plan were born.
This Earth Day, stok is proud to announce that, with the help of our partners, we are now offering every stok team member the ability to invest in a fossil fuel free 401(k) portfolio that matches their individual appetite for investment risk.
So, we dare you to also ask the question: “Is my 401(k) plan destroying the future I want to retire into?” If the answer is, “I’m not sure,” let’s talk about how to get there!
Remember, it’s not an investment if it’s destroying the planet!
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