Report evaluates and ranks 33 of the largest funds, highlighting gaps in proxy voting practices. Sierra Club’s third-annual report, “The Hidden Risk in State Pensions: Analyzing U.S. Public Pensions’ Responses to the Climate Crisis in Proxy Voting,” reveals that most public pensions continue to fail to adequately manage the climate-related financial risks to their investments through proxy voting, putting their long-term portfolio values at risk and undermining the retirement security of millions of public-sector workers. Read the report: https://www.sierraclub.org/hidden-risk-state-pensions-2026 The report analyzes the proxy voting guidelines, 2025 proxy voting records, and voting transparency of 33 of the largest and most influential public pension funds in the U.S. The pensions analyzed include New York City, Los Angeles County, and the University of California, and pensions in the following states: Arizona, California, Colorado, Connecticut, Florida, Illinois, Indiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee, Texas, Vermont, Virginia, Washington, and Wisconsin. “Even as political and regulatory headwinds led to fewer climate-related shareholder proposals reaching the ballot in 2025, the risks to pension portfolios have not changed. As proposals decline, director votes are becoming an increasingly important, but still underutilized, tool for maintaining support for corporate climate action. We urge public pensions to escalate their use of director accountability to push companies toward credible, science-based transition plans,” said Allie Lindstrom, Senior Strategist, Sustainable Finance Campaign, Sierra Club. MAJOR THEMES Proxy voting records in 2025 revealed a growing trend of investors willing to hold corporate boards of directors accountable for oversight failures. There is a growing connection between strong proxy voting guidelines and more consistent support of climate-related shareholder proposals, and this link remained even as the number of shareholder proposals declined significantly in 2025 due to political and regulatory headwinds. “Anti-ESG” efforts spread from the state to the federal level, including a new Securities and Exchange Commission (SEC) rule that expanded companies’ ability to exclude shareholder proposals from going to a vote, which was used in record numbers in 2025 and significantly disrupted the shareholder engagement process. KEY FINDINGS 4 pensions received “A” grades: Massachusetts Pension Reserves Investment Management (PRIM), New York State Common Retirement Fund (NYSCRF), three New York City pensions (NYCERS, TRS, BERS), and Vermont Pension Investment Commission (VPIC). 11 pensions received “B” or “C” grades, 12 pensions received “D” or “F” grades, and 6 pensions received “Incomplete” grades for failing to disclose their voting records. Proxy voting guidelines: One pension fund, Vermont Pension Investment Commission (VPIC), adopted stronger climate-related proxy voting guidelines in 2025. Proxy voting grades: Four pensions earned higher voting grades on climate-related resolutions than the previous year, but another four pensions earned lower voting grades. This declining support followed national trends. Guidelines inform voting: Pensions with strong proxy voting guidelines maintained support for climate risk management despite broader turmoil, but pensions with less comprehensive guidelines wavered. Board accountability: More pensions voted against at least one director than in the previous year. This 20% increase represents a significant increase in investor willingness to hold directors accountable. WHAT’S NEXT The report calls on U.S. public pensions to update their proxy voting guidelines to reflect evolving best practices, including requiring corporations to reduce real-world emissions over increased climate disclosures; strengthen their policies on board of director accountability on climate; strengthen their policies on biodiversity, human rights, Indigenous rights, just transition, and environmental justice; and add explicit language to protect beneficiaries’ savings from climate-related risks. EDITOR NOTE: An analysis of each pension’s data was sent to all fund managers and they were given the opportunity to provide feedback. 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 www.sierraclub.org.