Most U.S. Public Pensions Underuse Proxy Voting to Manage Climate Risk, New Report Finds

Why It Matters

Inadequate proxy voting leaves retirement assets exposed to climate‑related financial losses, threatening beneficiaries’ security and fiduciary compliance. Enhancing voting policies can protect portfolio value and drive corporate climate action.

Key Takeaways

• Only 4 of 33 pensions earned “A” grades for climate proxy voting.
• 12 pensions received “D” or “F” grades, indicating weak climate engagement.
• Board accountability votes rose 20%, showing growing willingness to challenge directors.
• Anti‑ESG SEC rule in 2025 increased proposal exclusions, hampering shareholder influence.
• Strong proxy guidelines link to consistent climate proposal support despite fewer ballots.

Pulse Analysis

The Sierra Club’s third‑annual report reveals that most of the nation’s 33 largest public pension funds are falling short in using proxy voting to curb climate risk. Only four funds earned an “A” grade, while a dozen received “D” or “F” scores, and six failed to disclose any voting data. This uneven performance leaves billions of dollars of retirement assets exposed to the financial fallout of a warming planet, threatening the long‑term security of millions of public‑sector workers.

Regulatory headwinds amplified the problem in 2025, as the SEC’s new anti‑ESG rule allowed companies to block shareholder proposals at record levels. Consequently, the number of climate‑related ballots fell sharply, pushing director votes to the forefront of climate governance. The report notes a 20 % rise in pension votes against at least one director, signaling a growing willingness to hold boards accountable. Funds with robust proxy guidelines maintained support for climate resolutions, demonstrating that clear policies can offset broader market turbulence.

To protect beneficiaries’ savings, pension trustees are urged to overhaul their voting policies. Recommendations include mandating emissions‑reduction targets, expanding accountability clauses for directors, and embedding biodiversity, human‑rights and just‑transition language into proxy guidelines. As climate risk becomes a material factor in asset valuation, funds that ignore proxy tools risk underperforming their peers and facing fiduciary challenges. Early adopters, such as New York State and Massachusetts PRIM, illustrate how proactive voting can align retirement portfolios with a low‑carbon future while preserving long‑term returns.