New Report: Most U.S. Public Pensions Lag on Investing in Climate Solutions Needed to Protect Retirement Savings

WASHINGTON, D.C. - A new report released today by the Sierra Club finds that most major U.S. public pensions are failing to adopt climate-solutions investing strategies needed to protect workers' retirement savings from escalating climate-related financial risks. This kind of investing is a critical component of a broader set of actions public pensions must take to mitigate systemic climate risk and drive real-world decarbonization. The report is the first of its kind to comprehensively assess and compare U.S. public pensions' approaches to investing in climate solutions.

• Read the report: The Climate Solutions Gap: An Assessment of U.S. Public Pensions' Investment Strategies

The report evaluated 29 U.S. public pension systems and one permanent fund, representing approximately $3.25 trillion in assets, on whether they have clear policies for directing capital toward credible climate solutions that reduce real-world emissions, strengthen resilience, and support a just transition.

Despite growing recognition that climate change poses systemic, economy-wide risks to long-term investment returns, the analysis found that most pensions lack clear targets, credible definitions, or transparent disclosures showing how their investments help finance low-carbon and resilient infrastructure and reduce climate-related financial risks.

"While some U.S. public pensions are beginning to address how climate change impacts portfolio performance, most still rely on high-level commitments or inadequate metrics that do little to drive emissions reductions in the real world and protect retirement security for millions of Americans," said Jessye Waxman, Sustainable Finance Campaign Advisor at the Sierra Club. "U.S. public pensions depend on a strong, stable economy to deliver on their promised benefits to public sector workers. The impacts of climate change are increasingly destabilizing the global economy. Mitigating the systemic risk of climate change requires rapid decarbonization and building the resilient, low-carbon infrastructure needed for sustainable economic growth and stability. Public pensions are well positioned to support and benefit from these efforts."

KEY FINDINGS

Only 4 of the 30 pensions assessed earned a "strong" score for their climate-solutions investing strategy: the Minnesota State Board of Investment, three New York City funds overseen by the City Comptroller (NYCERS, BERS, and TRS), the New York State Common Retirement Fund, and the Oregon Public Employees Retirement Fund.

The report highlights wide variations and persistent gaps in how U.S. public pensions approach climate-solutions investing:

• Most pensions lack clear strategies: 22 of 30 pensions received "weak" or "no policy" scores for climate-solutions investing, indicating no defined plan to allocate capital toward credible climate solutions.
• Most pensions lack net-zero commitments: 24 of 30 pensions had no discernible net-zero commitment. Among those that did, half lacked essential elements like clear implementation plans.
• Few pensions set measurable targets: Only 5 pensions established explicit targets for allocating investments to climate solutions. Among those that did, the scale and share of those allocations varied substantially.
• Narrow focus on clean energy: While 10 pensions earned "developing" scores for investments in clean energy, all pensions lagged significantly on investments in other areas crucial for mitigating climate risks, including nature and biodiversity, just transition, and climate resilience.
• Limited transparency: No pensions earned a "strong" score for holdings disclosures, making it difficult for beneficiaries and the public to assess whether investments meet credible standards or avoid greenwashing.
• Limited governance: Only 8 pensions earned a score of "strong" for board oversight, meaning the majority of pension boards have no prescribed climate-risk oversight responsibilities, receive no regular reporting on climate-related investing, or focus only on matters related to stewardship.

The report provides several recommendations for pension fund managers, including: establish clear, time-bound targets for climate-solutions investments across asset classes; prioritize investments that drive emissions reductions in the real world, not just in portfolios; adopt strong definitions and guardrails to prevent greenwashing; expand investments beyond clean energy to include resilience, nature, and just transition; and strengthen governance, reporting, and holdings-level transparency.

The 30 pensions assessed in the report are: Boston Retirement System (BRS); California Public Employees' Retirement System (CalPERS); California State Teachers' Retirement System (CalSTRS); Chicago Teachers' Pension Fund (CTPF); Colorado Public Employees' Retirement Association (CoPERA); Connecticut Retirement Plans and Trust Funds (CRPTF); Delaware Public Employees' Retirement System (DPERS); Employees Retirement System of Texas (ERS); Florida State Board of Administration (Florida SBA); Hawaii Employees' Retirement System (HERS); Illinois State Board of Investment (ISBI); Los Angeles County Employees Retirement Association (LACERA); Maine Public Employees Retirement System (MainePERS); Maryland State Retirement and Pension System (MSRPS); Massachusetts Pension Reserves Investment Management Board (MassPRIM); Minnesota State Board of Investment (SBI); New Hampshire Retirement System (NHRS); New Jersey State Investment Council (NJSIC); New Mexico Public Employees Retirement Association (NMPERA); New Mexico State Investment Council (NMSIC); New York City Comptroller (NYCERS, BERS, TRS); New York State Common Retirement Fund (NYSCRF); New York State Teachers' Retirement System (NYSTRS); North Carolina Retirement Systems and Ancillary Governmental Participant Investment Program (NCRS); Oregon Investment Council / Oregon Public Employees Retirement Fund (OIC / OPERF); Seattle City Employees' Retirement System (SCERS); State of Michigan Investment Board (SMIB); Teachers' Retirement System of the State of Illinois (TRS); Vermont Pension Investment Committee (VPIC); and Washington State Investment Board (WSIB).

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.