The hidden risk in state pensions: analyzing U.S. public pensions' responses to the climate crisis in proxy voting 2025

This report, published in February 2025 by the Sierra Club and Stand.earth, investigates how 32 of the largest and most influential U.S. public pension systems are responding to the climate crisis through their proxy voting strategies. As long-term investment fiduciaries managing over $3.8 trillion in assets, these pension funds are uniquely vulnerable to systemic risks like climate change. The study evaluates their proxy voting guidelines and records from 2024 to determine whether pensions are using their shareholder power to support corporate climate accountability. It also examines how political pressures, especially from “anti-ESG” legislation, are shaping the investment behavior and fiduciary actions of state pensions.

The findings reveal a stark divide: while a few pension systems (e.g., New York State Common Retirement Fund, MassPRIM, and CalPERS) are emerging as leaders by strengthening climate-related guidelines and votes, the majority of funds received low grades for failing to mitigate climate risk through their voting practices. Many systems, particularly those in anti-ESG states, lack policies to protect beneficiaries from economic fallout due to climate change. The report warns that inadequate governance and weak stewardship strategies jeopardize retirees’ financial futures and urges all pension funds to adopt robust, transparent, and risk-oriented proxy voting frameworks.