Greenhouse gas emissions and the resulting warming are causing significant, deleterious consequences for the global economy.
Prior studies estimate that unmitigated climate change will cut the world economy by $23 trillion by 2050; a recent study indicates that the longterm costs may be six times higher than previously estimated.1,2
These effects will have a significant impact on workers saving for retirement. Retirement plan beneficiaries have long investment horizons, and
"[t]he longer term the investment horizon, the more likely it is that climate will not only be a material risk, but the most material risk."3
Climate portfolio risk to retirement plans will be difficult to mitigate. An International Finance Corporation report concludes that "the traditional
way of managing risk through a shift in asset allocation into increased holdings of more conservative, lower risk, lower return, asset classes may
do little to offset climate risks."4
While our Company has taken actions to address its operational greenhouse gas emissions,5
it has not acted to meaningfully address the
emissions generated by its retirement plan investments. The plan's most popular option by assets invested is the BlackRock LifePath series.
The funds in this series account for 31% of plan assets. These funds invest heavily in high-carbon companies and companies contributing to
deforestation.6
High-carbon and deforestation-risk retirement plan investments are especially perverse when viewed from the perspective of younger workers with
longer term investment time horizons.7
Such investments fuel the climate crisis and lock in future temperature increases, making worst case
economic scenarios more likely. The retirement savings of younger workers will therefore suffer relatively higher impact from climate related
declines in global GDP than older workers' retirement savings. Many of the anticipated financial costs of climate change are likely already being
experienced by Disney employees. A recent report found that 401(k) participants at 12 major companies could have earned an estimated $5.1
billion in additional returns had their plans not been invested in fossil fuels over the past ten years.8
The Company's high carbon retirement plan
may also contribute to difficulty in worker recruitment and retention, as polling indicates employee demand for responsible retirement options. Federal law requires that retirement plan fiduciaries act in beneficiaries' best interests and ensure prudence of the plan's investments.
Recent regulatory amendments have confirmed that managing material climate risk is an appropriate consideration for retirement plan
fiduciaries.10 The Company can best ensure that it is meeting its obligations to employees, especially younger employees, by appropriately
mitigating climate risk in its retirement plan investments.