Sierra Club Publishes New Guidance for Financial Institutions on Credible Investments in Climate Solutions

NEW YORK - A new list of principles published by the Sierra Club guides financial institutions, namely public pensions, on how to make credible investments in climate solutions. The principles, developed alongside dozens of labor, public interest, and environmental organizations, marks the first time those groups have clearly defined what climate investments should, and should not, look like.

• Read the Principles for Climate Solutions Investments: https://www.sierraclub.org/articles/2025/09/principles-financial-institutions-credible-investments-climate-solutions

The recommendations go beyond merely asking investors to support clean energy technologies, green manufacturing, and zero-emissions transportation, detailing how investors should also pursue opportunities that support community climate resilience, including investments in green, affordable housing, as part of any comprehensive climate strategy. In the process, these investments can help create green jobs in local communities.

"Climate change is the single greatest systemic risk facing our economy, and pension funds are on the front lines. Investing in the low-carbon transition is necessary to protect pensions from these risks. People's retirement savings should not prop up polluting infrastructure that endangers the planet and pension benefits - it should fund investments that protect financial security, enable dignified retirements, and help people retire into safe, liveable, and economically resilient communities. Our guiding principles set a clear standard: credible climate investments must cut emissions, build resilient communities, and protect nature. Investors have a responsibility to put workers' long-term security ahead of short-term profits," said Jessye Waxman, Campaign Advisor in the Sierra Club's Sustainable Finance campaign.

SETTING A NEW STANDARD

With these principles, climate and labor groups are setting a new standard for what constitutes credible investments in climate solutions. Some of the recommendations go beyond investor guidance coming out of places like Europe, where frameworks such as the EU Taxonomy allows some investments in gas infrastructure to qualify as "transitional" or "green" financing, even though such projects risk locking in future carbon emissions. The principles emphasize that investments in climate solutions must:

• Prioritize real-world decarbonizationby financing projects and companies driving measurable, real-world emissions reductions.
• Facilitate the energy transitionby building solar and wind capacity, as well as improvements in grid infrastructure, energy storage, and energy efficiency.
• Protect nature and biodiversity,given that over half the world's GDP depends on healthy ecosystems.
• Support community climate resilience,including green housing, community adaptation, and pollution reduction, to protect workers and their communities.
• Support economic resilience,including seeking out regional investments, creating green jobs, and supporting globally equitable climate finance.
• Advance a just transitionby supporting worker protections, investing in Indigenous stewardship, and prioritizing communities most harmed by climate change.
• Provide credible transition finance by financing high-emitting companies only if they are implementing a credible transition plan.

The principles clarify that investments in carbon offsets, unbundled renewable energy credits, carbon capture and storage, gas infrastructure, data centers, and artificial intelligence, among other things, are not credible climate solutions investments.

QUOTES FROM ENDORSING ORGANIZATIONS

The principles are endorsed by 43 organizations, including the Labor Network for Sustainability, Action Center on Race and the Economy (ACRE), Americans for Financial Reform Education Fund, Public Citizen, and Third Act.

"Workers deserve benefits that benefit them. By making sustainable investments, pension funds can not only safeguard retirements, but safeguard our future against climate catastrophe by investing in clean energy, good jobs, and a just transition. Pensions are always about protecting workers' futures, and these principles ensure that investments go toward building a future that benefits all working people," said Sydney Ghazarian, Strategic Campaigns Director, Labor Network for Sustainability.

"The principles lay out what public pensions need to do to meet the current moment and protect workers from systemic risks like climate change and economic inequality. In addition to clean energy and resilience, pensions should focus on systems-level solutions that include infrastructure, affordable housing, community development, credible transition finance, and much more," said Alex Martin, Climate Finance Policy Director at Americans for Financial Reform Education Fund. "It's time for public pension managers and other investors to heed the call."

"As a CalPERS beneficiary and member of the Alliance of Californians for Community Empowerment (ACCE), who is living on a fixed income, I support these principles. We need greater transparency in CalPERS' Climate Action Plan, and think it is wrong for CalPERS to count investments in fossil fuel companies as 'climate solutions.' I live in San Diego and climate change is a growing threat to our community. We need investments in solutions that reduce emissions while funding things like affordable housing and renewable energy and jobs," said Barbara Pinto, Alliance of Californians for Community Empowerment (ACCE) member & CalPERS beneficiary.

About the Sierra Club

The Sierra Club is America's largest and most influential grassroots environmental organization, with millions of members and supporters. In addition to protecting every person's right to get outdoors and access the healing power of nature, the Sierra Club works to promote clean energy, safeguard the health of our communities, protect wildlife, and preserve our remaining wild places through grassroots activism, public education, lobbying, and legal action. For more information, visit https://www.sierraclub.org.