For as long as there has been a fossil fuel industry, it has been deeply bound up with the finance sector.

Despite the growing urgency of the climate crisis, the finance industry continues to expand its investments in and financing for fossil fuels and deforestation companies. They keep investing in fossil fuels (and companies that extract, emit, and use fossil fuels), and shareholders keep voting for boards of directors who want to keep business as usual.

That’s got to change.

Currently, public officials (including elected public officials such as State Treasurers) have a way to influence the very companies that are the key drivers of the climate crisis. And most of these public officials are leaving that power on the table and rubber-stamping the annual elections of the leaders of these companies.

The largest drivers of the climate crisis are corporations, and they need to be held accountable for change by those who invest in them.

In order to avoid the worst of the climate crisis (including the financial risks it poses), warming needs to be limited to 1.5 degrees. That will not happen if investors keep rubber-stamping corporate behavior when they have an ability to hold these companies and their leaders accountable.

Public pension funds are large pools (often in the tens of billions of dollars in each state) that represent the retirement savings of public sector workers such as teachers, public works employees, public health employees, etc.

These funds are often managed by trustees and often overseen by elected officials such as treasurers and/or comptrollers. Each state is a little different. These pension funds represent some of the largest funds in the country. Given that annual director votes allow voting based on the number of shares held, these funds have outsized influence on these votes – if they use their shareholder power.

Pension funds often hire large asset managers such as Blackrock or State Street to manage a portion of their pension fund investments. These large asset managers have even more voting shares and more voting power, and pension funds are some of their biggest, most important clients.

In these two ways, pension funds have inordinate (and largely unused) power to push for changes of corporate directors in cases where companies refuse to align with a 1.5 degree policy.

Divestment and Shareholder power are different and complementary strategies to address the climate crisis.

Shareholder power strategies seek to leverage investors (including public pension funds and the public officials who oversee them) to demand that ALL companies they invest in align their businesses with 1.5 C degrees of warming. This includes those that drill, emit, and use fossil fuels, those financial institutions that finance and invest in such fossil fuel activities, consumer goods companies that cause deforestation, and insurers that provide policies to fossil fuel companies and projects.

Divestment campaigns are efforts to liquidate shares of fossil fuel companies as a way to pull investment dollars out of those activities.