Introduction

1. United Nations Environment Programme, Emissions Gap Report 2025, November 4, 2025; Climate Central, U.S. Billion-Dollar Disasters 1980-2025.  

2. Benjamin Storrow, “The IRA was bearing fruit. Then Trump killed it,” E&E News by Politico, July 16, 2025 (accessed January 9, 2025). 

3. Lora Kelley, “When Did Everything Become ‘K-Shaped’?” New York Times, December 19, 2025 (accessed January 9, 2025).

4. Konrad Putzier, “How the U.S. Economy Became Hooked on AI Spending,” Wall Street Journal, November 24, 2025. 

5. See for example Majority Action’s Emerging Technologies, Evolving Responsibilities: Why Investors Must Act to Mitigate AI’s System-Level Impacts, Climate in the Boardroom 2024, and Equity in the Boardroom 2024.

6. Howard Covington and Raj Thamotheram, The Case for Forceful Stewardship (Part 2): Managing Climate Risk (January 19, 2015). While forceful stewardship has most often been described as an effective and systematic way of bringing about the changes needed to eliminate climate risk, we find it a useful framework for approaching other types of system-level threats, including inequality and unaccountable technology.

7. The majority of index funds in our analysis are those that track the S&P 500. While the S&P 500 has long been considered the gold standard of diversification, its status as a broad-market index has been thrown into question in recent years. Due to large increases in the share prices of a handful of technology stocks, the S&P 500 is now the most concentrated it has been since November 1965. The “magnificent seven” companies dominate the index’s market capitalization and drive a disproportionate share of the index’s returns. As a result, the index’s sector balance has also eroded, with sectors such as energy, materials, utilities, and real estate taking up less space than they have in previous decades. In late 2025, for the first time ever, the S&P 500 was no longer considered to be diversified according to rules established in the Investment Company Act of 1940, which regulates mutual funds and ETFs. 

8. BlackRock, “iShares Core S&P 500 ETF,” accessed January 9, 2025. 

9. Our analysis builds on a body of scholarship that examines the stewardship incentives of broad-based index funds. In “Systematic Stewardship” (2022), Jeffrey Gordon argues that a portfolio approach focused on reducing system-level risks is consistent with the investment strategy and low-cost business model of broad-based index funds and can help to boost risk-adjusted returns (albeit sometimes at the expense of expected returns). Others argue that indexers are incentivized to vote with management and underresource stewardship because competitor passive funds might free-ride on their efforts, and because fund managers' private interests in maximizing fees and minimizing costs override what beneficiaries would gain from active ownership.

10.  Zach Y. Brown et al., “Why Do Index Funds Have Market Power? Quantifying Frictions in the Index Fund Market,”  National Bureau of Economic Research, working paper 31778, October 2023, p. 1 (“ From 2000 to 2020, the number of index funds has increased by over 6 times”). 

11.  Leo E. Strine, Jr., “Fiduciary Blind Spot: The Failure of Institutional Investors to Prevent the Illegitimate Use of Working Americans’ Savings for Corporate Political Spending,” Washington University Law Review, vol. 97, no. 4 (2020).

12.  Brian Anderson, “Mutual Fund Ownership on the Rise, and Mostly Within 401(k)s,” 401kSpecialist, November 14, 2025.

13.  Investment Company Institute, Profile of ETF-Owning Households, 2024 Dataset, December 30, 2024 (accessed January 12, 2026).

14.  Strine, p. 1020.