Report: US state pensions not doing enough to protect clients against climate-related financial risks
![Report: US state pensions not doing enough to protect clients against climate-related financial risks](https://sustainabilityeconomicsnews.com/wp-content/uploads/2024/01/partial-view-of-people-holding-sackcloth-bag-with-2023-11-27-05-22-12-utc-1-scaled.webp)
According to a report released on Tuesday by Stop the Money Pipeline, Sierra Club, and Stand.earth, state pensions are not doing enough to protect beneficiaries from the rapidly growing environmental and climate-related financial risks.
Climate advocacy groups argue that state pensions should consider climate risks in their proxy voting strategies since it is their duty as fiduciaries to act in the interest of their clients.
In order to assess state pensions in terms of climate governance, the report uses three criteria:
- Proxy Voting Guidelines:
- Evaluation based on strength in addressing climate- and environment-related financial risks.
- Proxy voting guidelines serve as signals of investor priorities in corporate governance.
- These guidelines direct investor votes at companies’ annual meetings.
- Proxy Voting Record:
- Pensions assessed on their voting records regarding climate-related votes at financial institutions in 2023.
- Votes encompass a spectrum of climate accountability metrics at systemically important institutions.
- Data Transparency:
- Pensions are graded on the accessibility of their voting records and proxy voting guidelines.
- Transparency in data availability is considered a key factor in the evaluation process.
Proxy Voting Guidelines Evaluation:
- No pensions received an A grade.
- Three New York City systems (NYCERS, TRS, BERS) received B grades, based on strong performance on systemic risk, climate resolutions, and climate lobbying resolutions. They had a moderate performance in other categories.
- CalPERS, VPIC, and other New York City Systems (POLICE and FIRE) received C grades.
- Half of the pensions analyzed received F grades, including pensions from Oregon, Minnesota, Washington, Wisconsin, Colorado, New Mexico, Illinois, Maine, Nevada, and Delaware.
Proxy Voting Records Evaluation:
- Four state pension systems (Massachusetts, Oregon, California) and all New York City systems received A grades.
- Pension systems in Illinois (SURS), Rhode Island, Minnesota, and Wisconsin received B grades.
- Five pensions received F grades, including pension systems in Colorado, New Mexico, Illinois (ISBI), Maine, and Nevada.
Data Transparency Evaluation:
- Thirteen pensions received A+ grades for data transparency.
- Four state pensions received F or D grades due to proxy voting guidelines and/or records not being publicly available, requiring a FOIA request, or not provided even after a FOIA request.
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