Dive Brief:
- A former employee at commercial real estate services company Cushman & Wakefield filed a class action lawsuit Tuesday alleging that the firm failed to properly monitor and protect its employee 401(k) plan from “material climate-related financial risks,” according to a Wednesday press release from environmental legal nonprofit ClientEarth.
- The complaint alleges that Cushman & Wakefield broke the Employee Retirement Income Security Act of 1974 by continuing to include a Westwood Quality SmallCap fund in its plan that is “openly indifferent to climate risk.” The fund’s managers do not model or manage climate risk in the fund’s portfolio, according to the complaint.
- The lawsuit is the “first-of-its-kind” and, if successful, could create “a legal precedent that recognizes climate risk management as a mandatory component of fiduciary duty,” ClientEarth said in the release.
Dive Insight:
The lawsuit was filed by former Cushman & Wakefield employee Renee Kvek, who is also seeking to bring the lawsuit on behalf of all participants and beneficiaries of the real estate company’s 401(k) plan who are or were invested in the underperforming Westwood fund between January 2021 and the judgment date, according to the complaint.
Kvek said she was “disappointed to learn how exposed [her] savings were to climate-related financial risks, especially when the company clearly understood those risks in its own operations.”
“When your employer offers you a set of retirement options, you assume they've done the work to make sure those options are sound,” Kvek said in the release. “You pick a fund, you contribute every month, and you trust that someone is paying attention to the risks. … It’s really important that employers understand what types of investments they are offering through their 401(k) plans and how they can affect their employees’ retirement security.”
The complaint said that, “for decades,” Cushman & Wakefield “has positioned itself as an industry leader in sustainability practices, embedding climate-related considerations into the core of its business.” However, the firm still chose to include the Westwood fund in its retirement plan, which had $1.7 billion in assets and over 23,000 participants as of the end of 2024, without “adequately” considering the funds level of climate-related financial risk.
The complaint said the Westwood Quality SmallCap Fund underperformed the Russell 3000 index — which is designed as a benchmark for the U.S. stock market — “by wide margins” over 1-, 3-, 5- and 10-year periods prior to its inclusion. The fund underperformed the Russell 3000 index by over 17% in 2025, according to the complaint.
“ERISA was designed to protect retirement security and requires fiduciaries to protect workers from risks that would undermine that goal,” the complaint states. “Climate change-related risk presents precisely that kind of threat: it is financially substantial, it is escalating, and it imperils the value and stability of investments across asset classes — causing both sudden and long-term harms. And because such risk is not constrained to one or two industries, it can accumulate within diversified portfolios if not properly evaluated and managed as a discrete concern.”
Cushman & Wakefield and its investment committee are listed as defendants in the case. The lawsuit alleges three counts of ERISA violations: a fiduciary breach for failing to “select and monitor plan investments prudently, loyalty, and in accordance with plan documents;” a violation for engaging in prohibited transactions; and a failure to monitor other fiduciaries.
Kvek is represented by ClientEarth and attorneys from law firm Cohen Milstein, according to the release. Cushman & Wakefield did not respond to requests for comment as of press time.
“This first-of-its-kind legal challenge under ERISA will hopefully show 401(k) plans that the financial risks associated with climate cannot be ignored,” Cohen Milstein’s ERISA and Employee Benefits Chair Michelle Yau said in the release.
The case represents the other end of the spectrum, compared to recent climate-risk focused suits filed in court. In 2023, a former American Airlines pilot filed a class action lawsuit alleging the airline breached its fiduciary duties to prudence and loyalty. While a judge later determined the airline fulfilled its duty to prudence, he ruled the airline breached its duty to loyalty by not keeping its own corporate interests separate from its fiduciary responsibilities.
