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Key points
- A new Sierra Club report reveals that the majority of US public pensions are failing to take full advantage of proxy voting to manage climate-related financial risks to their investments.
- Political hostility to ESG, including a new US bill to block the consideration of ESG factors, caused a significant decline in shareholder proposals in 2025. However, pensions with strong proxy voting guidelines maintained their stance on climate risk.
- The report highlights that director votes are an underutilised tool for corporate climate action as traditional proposals decline, and urges US public pensions to strengthen policies on board-of-director accountability.
Most US public pensions are not making enough use of proxy voting to manage climate-related financial risks to their investments, according to a new report by the Sierra Club environmental group.
The report, which analyses the proxy voting behaviour of 33 of the largest and most influential US public pension funds, shows that the number of shareholder proposals declined significantly in 2025 due to political and regulatory pushback on the climate.
President Donald Trump’s hostility to climate issues has made financial institutions more hesitant to take action on green issues. Lawmakers passed a bill in January to limit the ability of state-sponsored pension funds to consider ESG factors in investment decisions.
However, the report found that pensions with strong proxy voting guidelines maintained support for climate risk management despite the political shift, even as pensions with less comprehensive guidelines wavered.
The Sierra Club also found there was a 20% increase in pension funds voting against at least one director compared to the previous year.
“As proposals decline, director votes are becoming an increasingly important, but still underutilised, tool for maintaining support for corporate climate action,” said Allie Lindstrom, senior finance strategist at the Sierra Club.
“We urge public pensions to escalate their use of director accountability to push companies toward credible, science-based transition plans.”
The Sierra Club said the pension funds’ engagement as active shareholders was significantly disrupted by anti-ESG efforts, including a new Securities and Exchange Commission rule that expanded companies’ ability to exclude shareholder proposals from going to a vote.
However, some big pension funds are still taking more action on climate despite the political headwinds, particularly in states that are not opposed to ESG.
“There’s a split among pensions depending on their state political context and their resources so some of the largest funds are still pursuing similar activity levels with shareholder voting. We’ve seen some pretty vocal leadership from the New York City pension funds,” Lindstrom said.
She noted that four pensions earned higher voting grades on climate-related resolutions than the previous year, but another four pensions earned lower voting grades.
Pressure is mounting on pension funds to take more account of climate change risks, with campaigners calling on trustees to make sustainable investment decisions and use their voting power to push companies they invest in to go green.
US and Canadian pension fund returns could fall up to 50% by 2040 if predictions for the worst global warming materialise and if the current approach to climate policy doesn’t change, according to analysis by Ortec Finance, a provider of technology and risk management solutions for financial institutions.
The Sierra Club called on US public pensions to update their proxy voting guidelines to reflect evolving best practices, including strengthening their policies on board-of-director accountability on climate issues and adding explicit language to protect beneficiaries’ savings from climate-related risks.
This page was last updated April 9, 2026
Written by
Emma Thomasson is a British journalist, consultant and trainer based in Berlin. She is an expert in economics, politics, business and technology. She previously worked for Reuters as a correspondent and bureau chief in Germany, Switzerland, the Netherlands, South Africa and the UK.
