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One of the world’s largest real estate companies is being sued by a former employee over claims it failed to protect its workers’ retirement savings from climate-related risks, in a case that could have ramifications for $12tn in US staff funds.
Renee Kvek, now in her 40s, alleges that Cushman & Wakefield failed in its fiduciary duty to members of its 401(k) retirement plan by offering a “wholly unsuitable” fund in spite of “numerous glaring red flags”.
Kvek’s lawyers said the retirement plan offered only the one choice of fund among the investment options in its category, the Westwood Quality SmallCap Fund.
The claim said this fund had “inordinate levels of climate-related financial risk across its investment sectors” and the Westwood fund explicitly chose not to manage climate risk. Westwood declined to comment.
It had unreasonably high fees and chronic underperformance, according to the claim, with an undue risk of even more severe losses in future.
This had resulted in a breach of the pension plan’s duties to act “prudently and solely in the interest of plan participants” under the Employee Retirement Income Security Act, it said.
The class action is unusual in taking on a US retirement plan over a failure to adequately assess climate risk and could set a precedent for how plans must factor in material climate change risk into their investment decisions.
The outcome of the case filed in a US district court in Washington state could also influence wider legal questions about how the long-term risks posed by climate change apply to fiduciary duties.
It stands in contrast with a case brought by an American Airlines pilot in 2023, who claimed the company failed workers by hiring investment managers that pursued “leftist political agendas through ESG strategies”.
Kvek was employed by Cushman as a regional manager for three years until 2024, when she moved to a similar role elsewhere.
The claim filed on her behalf by law firm Cohen Milstein and the non-profit organisation ClientEarth said the significant cross-sector financial impacts of climate change had become “increasingly apparent”, citing wildfires, storms, droughts and other weather-related events that had increased in frequency and destructive capacity, “resulting in severe financial losses”.
It added that Cushman was “acutely aware” of the risks, as it managed climate-related financial risks at corporate level.
“Cushman’s prudent and proactive management of climate-related financial risks in their own operations stands in stark contrast to their mismanagement of the plan,” the claim said.
Fidelity Investments was named in the filing as a record keeper, trustee and investment adviser for the retirement plan but is not involved in the case. A person close to Fidelity said it did not select or make recommendations for investment options that retirement plan fiduciaries chose to offer.
Cushman & Wakefield declined to comment.
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