A new report from the Sierra Club finds that most major US public pensions are not investing in climate solution strategies.

The report, The Climate Solutions Gap: An Assessment of US Public Pensions’ Investment Strategies, evaluated 29 US public pension systems and one permanent fund, representing approximately $3.25tr in assets, on whether they have clear policies for directing capital toward credible climate solutions that reduce real-world emissions, strengthen resilience, and support a just transition.

Despite growing recognition that climate change poses systemic, economy-wide risks to long-term investment returns, the analysis found that most pensions lack clear targets, credible definitions, or transparent disclosures showing how their investments help finance low-carbon and resilient infrastructure and reduce climate-related financial risks.

“While some US public pensions are beginning to address how climate change impacts portfolio performance, most still rely on high-level commitments or inadequate metrics that do little to drive emissions reductions in the real world and protect retirement security for millions of Americans,” said Jessye Waxman, sustainable finance campaign advisor at the Sierra Club.

For example, most pensions lack clear strategies: 22 of 30 pensions received “weak” or “no policy” scores for climate-solutions investing, indicating no defined plan to allocate capital toward credible climate solutions, and most pensions lack net-zero commitments: 24 of 30 pensions had no discernible net-zero commitment. Among those that did, half lacked essential elements like clear implementation plans.

The report provides several recommendations for pension fund managers, including: establishing clear, time-bound targets for climate-solutions investments across asset classes; prioritising investments that drive emissions reductions in the real world, not just in portfolios; adopt strong definitions and guardrails to prevent greenwashing; expand investments beyond clean energy to include resilience, nature, and just transition; and strengthen governance, reporting, and holdings-level transparency.

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