When Climate Risk Meets Retirement: A New Climate Lawsuit Targets 401(k) Fiduciaries

A newly filed lawsuit in the United States raises an new and increasingly important question for climate and financial law: what happens when climate-related financial risk enters the world of retirement plan fiduciary duties?

The case, Kvek v. Cushman & Wakefield U.S., Inc., does not accuse a company of emitting greenhouse gases or misleading investors about climate policy. Instead, it targets the way a major employer managed the investment options in its employee retirement plan. The complaint argues that fiduciaries responsible for overseeing the company’s 401(k) plan failed to properly evaluate the financial risks associated with a particular investment fund, including risks linked to climate change.

That framing alone makes the case notable. It reflects a growing shift in climate litigation toward financial governance and investment decision-making rather than traditional environmental regulation.

A lawsuit about retirement savings

The case was filed on behalf of participants in the Cushman & Wakefield 401(k) Plan, a large employee retirement plan with approximately $1.7 billion in assets and more than 23,000 participants (Complaint, p. 7). Like most U.S. 401(k) plans, employees direct their retirement savings into a menu of investment funds selected and monitored by plan fiduciaries.

Under the Employee Retirement Income Security Act of 1974 (ERISA), those fiduciaries must act prudently and in the best interests of plan participants. The law requires them to evaluate investments with “the care, skill, prudence, and diligence” expected of someone familiar with such matters (Complaint, p. 12).

The lawsuit argues that these obligations were breached when the plan added and retained a particular investment option: the Westwood Quality SmallCap Fund.

According to the complaint, the fund replaced a previous small-cap investment option in 2021 and was offered as part of the plan’s investment lineup (Complaint, p. 34). The plaintiff alleges that the fund exhibited several warning signs at the time of its selection, including persistent underperformance relative to benchmark indices and comparatively high fees (Complaint, pp. 42–46).

But what makes the case stand out is not only the performance argument. It is the role climate risk plays in the allegations.

Climate risk as a 401(k) fiduciary issue

The complaint places climate-related financial risk at the center of its theory of fiduciary breach.

The plaintiff alleges that the fund’s investment strategy did not account for climate-related financial risks and that disclosures from the fund manager indicated that climate change considerations were not incorporated into its investment policies or scenario analysis (Complaint, p. 36). At the same time, the fund allegedly held significant exposure to sectors identified as vulnerable to climate-related financial impacts (Complaint, pp. 37–41).

The complaint argues that failing to evaluate those risks was inconsistent with the fiduciary duty to prudently assess investments offered to plan participants.

Crucially, the argument does not frame climate considerations as an ethical or environmental preference. Instead, the complaint presents climate exposure as a financial risk factor that could affect portfolio performance and long-term value.

That framing reflects a broader shift in financial markets. Over the past decade, regulators, financial institutions, and international bodies have increasingly treated climate change as a source of material financial risk. The Task Force on Climate-related Financial Disclosures (TCFD), for example, has emphasized that climate-related risks can affect asset valuations, supply chains, and long-term investment returns.

The lawsuit effectively asks whether that understanding should also shape the way retirement plan fiduciaries evaluate investment funds.

Turning corporate climate rhetoric back on the company

Another striking aspect of the complaint is the way it uses the company’s own public statements about climate risk.

According to the filing, Cushman & Wakefield has publicly acknowledged the financial significance of climate-related risk in its corporate work and advisory services. The complaint cites materials in which the company described climate risk as a financial issue affecting asset values and investment decision-making (Complaint, pp. 22–26).

The plaintiff argues that despite recognizing these risks in its broader operations, the company failed to apply similar analysis when overseeing employee retirement investments.

Whether that argument ultimately succeeds remains to be seen. But the strategy reflects a broader pattern emerging in climate litigation, where plaintiffs increasingly rely on companies’ own climate disclosures or risk statements to frame legal claims.

Why this case matters

At this stage, the lawsuit is simply a complaint. No court has yet evaluated the allegations or ruled on whether they state a viable ERISA claim. Still, the case is significant for several reasons.

• It expands the terrain of climate litigation: Much climate-related litigation has focused on government regulation, corporate emissions, or investor disclosures. This case instead targets retirement plan governance, a field traditionally dominated by technical fiduciary litigation rather than environmental disputes.

• It frames climate change as a question of financial prudence rather than environmental responsibility: The claim does not argue that fiduciaries had a duty to choose climate-friendly investments. Instead, it argues they had a duty to evaluate financial risks associated with climate exposure when selecting investment funds.

• It highlights the increasing intersection between climate risk and institutional investment: Pension funds, asset managers, and retirement plan committees collectively control trillions of dollars in assets. As climate-related risks become more prominent in financial markets, disputes about how those risks should be evaluated are likely to appear more frequently in fiduciary litigation.

Read the full complaint here.

Read the complete Climate Court analysis here.