Pensions at Risk

Most U.S. public pensions continue to fail to adequately manage the climate-related financial risks to their investments through proxy voting, putting their long-term portfolio values at risk and undermining the retirement security of millions of public-sector workers.

The report analyzes the proxy voting guidelines, 2025 proxy voting records, and voting transparency of 33 of the largest and most influential public pension funds in the U.S., including New York City, Los Angeles County, and the University of California.

Despite the decline in climate-related shareholder proposals reaching the ballot in 2025, the risks to pension portfolios have not changed, and director votes are becoming increasingly important but still underutilized.

The Sierra Club's report emphasizes the need for public pensions to escalate their use of director accountability to push companies toward credible, science-based transition plans.

To address this issue, the report calls on U.S. public pensions to update their proxy voting guidelines to reflect evolving best practices, including requiring corporations to reduce real-world emissions over increased climate disclosures.

Strengthening policies on board of director accountability on climate and biodiversity are also recommended to ensure that companies prioritize environmental sustainability in their operations.

The report highlights the importance of protecting beneficiaries' savings from climate-related risks through explicit language in proxy voting guidelines.

By taking proactive steps in managing climate-related financial risks, public pensions can help mitigate the impact of climate change on their long-term portfolio values and retirement security.

Ultimately, this report underscores the need for public pensions to prioritize environmental sustainability and take a proactive approach to addressing the climate crisis.