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

A recent report by the Sierra Club has revealed that the majority of US public pension funds are underutilising proxy voting as a tool to manage climate-related financial risks. The third annual analysis assessed 33 of the largest and most influential public pension funds across the country, including those in New York City, Los Angeles County, and the University of California system. Despite mounting evidence of climate risks threatening long-term portfolio values, many pensions have failed to adequately hold companies accountable through their voting practices, potentially jeopardising the retirement security of millions of public-sector workers. The report highlights key trends in proxy voting behaviour during 2025, noting a decline in climate-related shareholder proposals due to political and regulatory pressures, including a new SEC rule that allowed companies to exclude more proposals from votes. Nonetheless, some investors have increasingly used votes against corporate directors as a means to demand stronger climate oversight. Funds with robust proxy voting guidelines tended to maintain consistent support for climate action, while those with weaker policies showed less commitment. Notably, only four pension funds received top “A” grades for their proxy voting practices, while a significant number earned lower marks or failed to disclose their voting records altogether. Sierra Club’s Senior Strategist, Allie Lindstrom, emphasised the growing importance of director accountability in the face of fewer shareholder proposals, urging public pensions to intensify their efforts to push companies towards credible, science-based transition plans. The report calls for pension funds to update their proxy voting guidelines to better reflect best practices, including demands for real-world emissions reductions, stronger board accountability, and policies addressing biodiversity, human rights, and environmental justice. These steps are seen as essential to protecting beneficiaries’ savings from the escalating risks posed by climate change. Looking ahead, the Sierra Club recommends that public pensions adopt more comprehensive and transparent proxy voting policies to safeguard their investments and support a just transition to a low-carbon economy. The organisation also engaged directly with pension fund managers during the research process to provide feedback opportunities, signalling a collaborative approach to improving climate governance in the public pension sector. As climate risks continue to intensify, the report underscores the urgent need for institutional investors to leverage their shareholder influence more effectively.