Sphere Raises $2M for Green 401(k) Employee Lobbying

Understanding Fossil Fuel Exposure in 401(k) Plans

A 401(k) plan, as offered by employers in the United States, functions as a defined-contribution pension account. However, traditional investment strategies often result in some degree of investment in fossil fuels, a fact largely unknown to many plan participants.

A new company is aiming to address this lack of transparency and provide alternatives. Sphere, a California-based startup, is focused on empowering employees to request fossil fuel-free investment choices from their employers.

Sphere's Approach to Fossil-Free Investing

Sphere is developing financial products designed to simplify the process for employers to incorporate fossil-free investment options into their 401(k) plans. The company believes this initiative has the potential to become a significant trend within retirement savings.

Currently, the total value of retirement savings in the U.S. exceeds $35 trillion, as of the first quarter of 2021, according to Sphere’s data.

Recent Funding and Corporate Structure

The startup has recently secured $2 million in funding, led by climate tech venture capital firm Pale Blue Dot. Additional investment came from other climate-focused investors, including Sundeep Ahuja of Climate Capital.

Sphere is registered as a Public Benefit Corporation, which allows the company to publicly advocate for climate change solutions.

Leadership and Expertise

Alex Wright-Gladstein, the CEO and founder of Sphere, stated: “We are proud to be partnering with Pale Blue Dot on our mission to reverse climate change by making our money talk.” She further emphasized the importance of rapid action, referencing the need to limit warming to 1.5°C within a seven-year timeframe.

Wright-Gladstein has collaborated with Jason Britton, a veteran in sustainable investing from Reflection Asset Management and BITA custom indexes, to bring expertise to the project.

The Challenge of Fossil-Free Options

Wright-Gladstein’s experience with her previous startup, Ayar Labs, highlighted the difficulties in offering fossil-free options within 401(k) plans. Implementing even a single fossil-free choice for employees took three years.

Pale Blue Dot's Perspective

Heidi Lindvall, general partner at Pale Blue Dot, commented: “We are big believers in Sphere’s unique approach of raising awareness through a social movement while offering a range of low-cost products that address the structural issues in fossil-free 401(k) investing.”

This approach combines advocacy with practical solutions for investors seeking to align their retirement savings with their environmental values.