Right now, we're seeing unprecedented attacks on environmental protections. With the federal government failing to address the climate crisis, major investors must step up by investing in climate solutions and holding polluting companies accountable.
Public pension funds manage the retirement savings of millions of workers, including teachers, firefighters, and nurses. Climate change is already driving extreme weather and rising costs – putting the economy and people’s retirement savings at risk. To protect workers' savings, public pensions need to take concrete steps that help push companies to cut emissions and build a more resilient economy.
The good news? Pensions can – and some already do – invest in critical climate solutions like clean energy and climate-resilient infrastructure. But a new Sierra Club scorecard shows that most major U.S. public pensions’ climate strategies are falling short. Many lack clear goals or meaningful indicators of progress.
As some of the largest investors in the U.S., public pensions have both the power and the responsibility to invest in ways that address climate risk and help protect workers' retirements. They need to know that their beneficiaries and people across their state are demanding better.
How Pensions Can Strengthen Their Approach to Climate-Solutions Investing
Sierra Club’s recent scorecard shows that many public pensions still lack clear goals, strong standards, and/or adequate disclosures, which are key indicators of whether funds are meaningfully addressing the root causes of climate-related financial risks.
We are urging public pension leaders to strengthen their pension’s approach to climate-solutions investing by:
- Establishing clear, time-bound targets for climate-solutions investments across asset classes;
- Prioritizing investments that drive real-world emissions reductions and resilience, not just portfolio-level metrics;
- Adopting strong definitions and guardrails to prevent greenwashing and ensure credibility;
- Expanding investments beyond clean energy to include resilience, nature-based solutions, and a just transition; and
- Strengthening governance, reporting, and transparency so progress can be clearly assessed.
Taken together, these steps would help ensure that climate-solutions investing meaningfully contributes to protecting beneficiaries’ retirement savings in a changing economy.
Questions About Public Pensions You Didn’t Know You Had
If I'm not a public worker, does this affect me?
Yes! Public pensions hold the retirement savings of millions of public workers, but they are overseen by state and local officials who are accountable to all of us. When pension funds fall short of their investment targets, governments often have to increase contributions to close the gap, putting additional pressure on state and local budgets. This can lead to higher taxes or cuts to public services, affecting everyone in the community. Fund managers have an obligation to protect workers' savings for the long term, but too often they’re focused on short-term returns. Climate change is already driving extreme weather and rising costs -- putting these funds and people's retirement savings at risk.
Are pension funds' current investments failing us?
Yes. Right now, many funds' climate policies lack clear goals and strong standards. Most fail to measure whether their investments are helping reduce the greenhouse gas emissions driving climate-related financial risks. Public pensions have the power and the responsibility to use their investments to help protect workers' retirements and all of our futures by supporting solutions like clean energy and resilient infrastructure.
Why would the managers of these pension funds care?
Climate change is not just an environmental crisis -- it's also an economic one. Disasters are already causing massive financial damage to cities and towns nationwide. These pensions are meant to prioritize long-term returns. They should be doing all they can to address the enormous financial risks posed by climate change. But, too many still aren’t doing enough.
So you say pensions can really be part of the solution?
Public pensions across the country can and are using their power to drive change by scaling investments in climate solutions and restricting funding for dirty energy. Several public pensions have already committed billions to climate solutions. We're making progress. Regardless of who's in the White House, public pensions must do more to help support the transition to a clean energy economy and avoid climate disaster.