REPORT: The Hidden Risk in State Pensions

January 23, 2024
Analyzing State Pensions’ Responses to the Climate Crisis in Proxy Voting

USA – Ahead of the 2024 shareholder season, a first-of-its-kind reportThe Hidden Risk in State Pensions: Analyzing State Pensions’ Responses to the Climate Crisis in Proxy Voting,” from, Sierra Club, and Stop the Money Pipeline analyzes proxy voting records, proxy guidelines, and voting transparency of public pensions of 24 public funds collectively representing over $2 trillion in assets under management (AUM).

These pensions are based in states where a state financial officer is a member of For the Long Term, a network that advocates for more sustainable, just, and inclusive firms and markets and strives to protect markets against climate risk.

The pensions analyzed include the pension systems of New York City and the states of California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Mexico, Oregon, Rhode Island, Vermont, Washington, and Wisconsin.

The full report is available here.

In 2023, the Board of Governors of the Federal Reserve, the FDIC, and the OCC wrote:

“The financial impacts that result from the economic effects of climate change and the transition to a lower carbon economy pose an emerging risk to the safety and soundness of financial institutions and the financial stability of the United States.”

This analysis reveals however that public pensions are failing to take the steps necessary to tackle the climate crisis and reduce climate-related financial risk, which not only makes addressing climate change harder, but also puts the hard-earned savings of millions of Americans at risk.

The report states:

“As long-term fiduciaries, pension funds should be among the investors most alarmed about the economic risk associated with the climate crisis. Some have taken public strides forward, such as announcing net-zero pledges, investing in climate solutions, or defending the right to invest responsibly…

“However, as this report shows, the institutions responsible for stewarding trillions of dollars on behalf of workers are failing to address climate-related financial risk in their proxy voting strategies, a key tool investors have to encourage responsible corporate governance and corporate behavior.”

Topline findings

On proxy voting guidelines, no pensions received an A grade.

  • Three New York City systems (NYCERS, TRS, BERS) received B grades, due to strong performance on systemic risk, climate resolutions, and climate lobbying resolutions, and moderate performance on all other categories.
  • CalPERS, VPIC, and the remaining New York City Systems (POLICE and FIRE) received C grades.
  • Half of the pensions analyzed received F grades, including pensions based in Oregon, Minnesota, Washington, Wisconsin, Colorado, New Mexico, Illinois, Maine, Nevada, and Delaware.

On proxy voting records, four state pension systems based in Massachusetts, Oregon, and California, and all of New York City’s five pension systems received A grades, based on how often they supported climate-related resolutions and opposed directors failing to mitigate climate risk.

  • Pension systems based in Illinois (SURS), Rhode Island, Minnesota, and Wisconsin received B grades.
  • Five pensions received F grades, including pension systems based in Colorado, New Mexico, Illinois (ISBI), Maine, and Nevada.

On data transparency, thirteen pensions received A+ grades.

  • Four state pensions received F or D grades, as their proxy voting guidelines and/or voting records were either not publicly available, were only available via a Freedom of Information Act (FOIA) request, or were not provided even after a FOIA request was made.
Scorecard of 24 public US pension funds' grades for three categories of proxy voting, guidelines, and transparency. Ranked by grades color-coded respectively for: A (green); B (blue); C (yellow); D (orange); F (red)
The Hidden Risk in State Pensions: Analyzing State Pensions’ Responses to the Climate Crisis in Proxy Voting

The findings are clear: far too few public pensions are taking adequate steps to address climate-related financial risks and protect members’ hard-earned savings. This analysis raises serious concerns about the execution of fiduciary duty — the obligation that financial institutions have to act in their clients’ best interest. All of the pensions highlighted in this report can do more to protect beneficiaries from growing climate- and environment-related financial risks.

The report continues:

“Pensions are both universal owners and long-term owners. Given this, pension funds are some of the institutions most exposed to systemic financial risks, such as those posed by the climate crisis and biodiversity loss, and must therefore adapt their investment and stewardship strategies to meet their fiduciary obligations in light of these emerging risks.”

To mitigate these risks, report authors recommend that the pensions analyzed in this report update and strengthen proxy voting guidelines, and use those guidelines to direct their voting practices in 2024 and beyond. For some of the pensions in this report, updated proxy voting guidelines are expected ahead of the proxy voting season in the months to come–to ensure strong climate policies, the authors recommend referring to the included model guidelines.


Amy Gray, Associate Director of Climate Finance,

“This report is a stark reminder that pension funds can – and must – do so much more to wield their massive investor power. As investors on the longest-term horizons, pensions must read the writing that’s been on the wall for decades: live up to their fiduciary duty, and protect pensioners and climate alike through updated proxy voting guidelines ,and voting in line with climate and human rights. It is disappointing to see so many funds not accessing such a powerful strategy to defend climate and the working class communities they serve. This report is a helpful roadmap for pensions, and a key tool for public pressure in the lead-up to and around shareholder meetings this Spring. ”

Alec Connon, Coalition Co-Director, Stop the Money Pipeline:

“How pensions vote at annual shareholder meetings may be the most important climate votes that you’ve never heard of. Unfortunately, far too many pensions are regularly voting against climate action. If we’re to have any hope of achieving global climate goals, that needs to change.

Jessye Waxman, Senior Campaign Strategist, Sierra Club:

“As stewards of trillions of dollars, how these pensions vote makes a difference. By making the responsible choice to use their proxy voting authority to hold companies accountable for their negative climate impacts, pensions can not only protect the retirement savings of their beneficiaries from the financial repercussions of climate change, but do their part to help hit global climate goals.”




Lindsay Meiman,,, +1 (917) 970-2281

Ginny Cleaveland, Sierra Club,, +1 415 508 8498

Advanced copies were sent to all pension fund managers, and report authors carried out deep consultations with all pension fund managers who responded to requests for feedback on the report.

The report analyzes pensions on three criteria:

  1. Proxy voting guidelines: Proxy voting guidelines were evaluated for their strength on addressing climate- and environment-related financial risks. Voting guidelines signal investor priorities on corporate governance and direct how an investor votes at companies’ annual meetings, including on matters related to a company’s climate strategy.
  2. Proxy voting record: Pensions were evaluated on their voting records on a set of climate-related votes at financial institutions in 2023. These votes represent a range of climate accountability metrics at systemically important and high-impact institutions.
  3. Data transparency: Pensions were graded on how easily accessible their voting records and proxy voting guidelines are.