The Hidden Risk in State Pensions: Analyzing State Pensions’ Responses to the Climate Crisis in Proxy Voting
Ahead of the 2024 shareholder season, a first-of-its-kind report “The Hidden Risk in State Pensions: Analyzing State Pensions’ Responses to the Climate Crisis in Proxy Voting,” from Stand.earth, Sierra Club and Stop the Money Pipeline, analyzes proxy voting records, proxy guidelines, and voting transparency of 24 public pension funds in the USA 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 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.
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.