The Supreme Court ruling that could get fossil fuels out of your retirement fund

Many Americans with retirement savings are funding fossil fuels without even knowing it. If your religious or moral beliefs say that's wrong, a recent Supreme Court decision may give you the right to demand something different.

Around $863 billion of American retirement savings is currently invested in oil, gas, and coal companies. That money flows through 401(k)s, 403(b)s, and pension plans, often into index funds that passively invest in whatever the market holds, including the fossil fuel industry.

For many people, this is a passive arrangement they've never thought about. But for those whose religious or moral convictions tell them to protect the environment, avoid profiting from harm, or act as stewards of creation, it's something more serious. It's a conflict between their beliefs and a material benefit of their employment.

Until recently, there wasn't much to be done. Employer-sponsored retirement plans offer limited investment options to employees, and many employers don't include fossil-free funds on the menu. Employees who objected had few avenues to push back.

That may be changing.

The Groff decision

In 2023, the Supreme Court decided Groff v. DeJoy, a case that had nothing to do with climate change or retirement funds. Gerald Groff is an evangelical Christian postal worker who refused to work on Sundays and was disciplined for it. He sued, arguing that his employer was required to accommodate his religious practice.

The court ruled in his favor and, in doing so, clarified the standard that employers must meet under Title VII of the Civil Rights Act. The previous threshold – that employers could deny accommodations if they imposed "more than de minimis" cost – was replaced with a stricter test. Now, employers must accommodate religious or moral beliefs unless doing so would impose a "substantial" burden on the business. 

This is a meaningful shift. And it has implications well beyond postal workers and Sunday shifts.

Applying Groff to retirement plans

Under the new standard, if your sincerely held religious or moral beliefs conflict with investing in fossil fuels, your employer may now be legally obligated to offer you a retirement option that doesn't require you to violate those beliefs.

Adding a fossil-free fund to an existing retirement plan is not a substantial burden for most employers. These funds exist, are widely available, and can easily be added to a menu of retirement options. Under Groff, refusing that request becomes much harder to justify.

And because the fund could be added to the plan's menu rather than carved out for one individual, the accommodation for one could deliver access to every employee at that company — meaning a single accommodation request can have an impact well beyond the person who made it.

This case is the first of its kind and the strength of any individual claim will depend on the specific facts. But the legal footing is stronger than it was before Groff, and employees have more leverage than most realize.

Who this applies to

You don't need to belong to an organized religion to qualify for a religious accommodation. Title VII protections extend to certain  sincere moral or ethical beliefs, held with the strength of traditional religious views and in good faith. If your conscience tells you that profiting from fossil fuels is wrong, that belief may be protected – whether it comes from scripture, from secular ethics, or simply from a deeply held conviction about the kind of world you want to live in.

What comes next

At ClientEarth, we're working with individuals whose beliefs conflict with fossil fuel investment to explore this path. It's not the most obvious climate strategy. But the financial system's entanglement with fossil fuels is sustained by inertia as much as anything else. Retirement money flows into oil and gas because that's where it's always flowed, and because most people don't know they can object.

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