This report analyses the proxy voting strategies of nineteen state pensions, as well as the five New York City Comptroller systems, managing more than US$2 trillion in assets. It aims to reveal whether these pensions address climate-related financial risk in their proxy voting strategies. 

Evaluating pensions on key systemic risks 

The report evaluated these 24 pensions based on three criteria – proxy voting guidelines, proxy voting record in 2023, and data transparency. Most pensions failed to address climate-related financial risk in their proxy voting strategies. The evaluation showed that pensions need to improve proxy voting guidelines and records to mitigate climate change and related risks.  

Proxy voting guidelines 

Proxy voting guidelines were evaluated for their strength on climate and environment-related risks, including systemic risks. Pensions were graded on the depth and scope of their guidelines, with issues including environmental justice and Indigenous rights, weighted equally in the overall grade. None of the evaluated pensions consistently showed strong policies across all the categories examined. 

Proxy voting record 2023 

The report assessed the voting record of pensions on climate-related votes at financial institutions. The six largest US banks’ voting opportunities were evaluated as these banks play a key role in the transition to a low-carbon economy. The evaluations were based on their support of climate-related resolutions and opposition to directors failing to mitigate climate risk. Results showed that the selected pensions oppose climate-related resolutions far more than they support them. 

Data transparency 

Pensions were graded on how easily accessible their voting records and proxy voting guidelines were. Transparency sets corporate governance expectations and informs pension beneficiaries about how their investments are being managed. Only a few pensions performed very well in data transparency. 

Recommendations 

The report recommends pension funds update and strengthen proxy voting guidelines. Engage asset managers and proxy advisors on climate and environment-related risks to encourage responsible corporate governance and behaviour. Additionally, it suggests supporting policy and legislative efforts to mitigate climate and environmental-related risks.  

This report highlights pension funds’ failure to address climate-related financial risk in their proxy voting strategies. It emphasises the importance of transparent and effective corporate governance for successful climate-risk management. The report recommends that pensions improve their proxy voting guidelines and voting record to mitigate climate change and related risks, with further policymakers’ support in mitigating climate and environmental-related risks.