With increasing federal and state-level challenges to responsible investing, pension funds must proactively defend their fiduciary duty and investment strategies. As regulatory oversight weakens and political attacks escalate, funds that fail to solidify their policies and engagement strategies risk losing control over their ability to manage long-term financial risks, particularly those tied to climate change. Keep reading to discover actionable strategies to ensure funds remain resilient and advance responsible investment practices despite shifting policies.

As 2025 unfolds, state pension funds face an increasingly hostile federal policy environment that threatens responsible investing and fiduciary stewardship. From regulatory rollbacks to politically motivated attacks on proxy voting and ESG policies, pension stakeholders must prepare for new risks that could undermine their ability to safeguard long-term financial stability. This post breaks down the key federal or national-level threats underway as of February 18, 2025.

Workers—who contribute to and rely on these pension funds—deserve a stronger voice in how their retirement savings are invested. They are not just beneficiaries but stakeholders with a vested interest in ensuring that their pensions are protected from climate-related financial instability. However, they often find themselves excluded from key investment and stewardship decisions due to governance structures that concentrate power among financial professionals and policymakers.

Like a thriving garden, a well-managed pension system requires a healthy foundation and effective day-to-day care. For funds to remain sustainable and effective, decision-makers must tackle systemic risks, like corporate accountability and the climate crisis, and reconcile process issues by adopting systematic investment strategies to make informed decisions.

When it comes to managing investments, two concepts often come into play: value investing and investing your values. While these approaches may seem worlds apart, they both offer unique strategies for creating long-term financial growth. Understanding how they work and how they relate to the future of pension funds can help trustees make more thoughtful, informed decisions that prioritize both financial security and social responsibility.

Disinformation is a challenge, but understanding its goals and pitfalls can help you effectively combat it and keep the focus on advancing sustainable and equitable solutions.

Investing strategies often fall into two categories: active and passive. While each has its merits, understanding the differences between these approaches can shed light on how investments impact broader issues—including climate change and the public pension system.

Modern slavery, a term encompassing debt bondage, human trafficking, child and forced labor, is a significant and growing problem within global supply chains. These chains, which involve multiple layers of workers, including contractors, subcontractors, and suppliers, can be incredibly efficient and profitable. However, they are often driven by unseen or overlooked forced labor due to high demand, labor-intensive processes, and limited oversight.

The fundamental priority of fiduciary duty in the pension system is clear: ensuring pensions are paid to members for a secure dignified retirement. As pension funds grow, so does their responsibility to safeguard the financial security of millions of workers. However, fulfilling this fiduciary duty extends beyond wealth accumulation—it involves managing investments wisely, with an eye toward long-term economic stability for members by integrating climate accountability into their policies and investment strategies.

With a steady increase in cleantech investments come technological advancements and opportunities to generate new jobs in research and development, installation, maintenance, and other areas. Energy jobs, in particular, tend to pay higher wages than the national average, making cleantech a significant avenue for economic growth. Recently, the industry has seen regional success with about one-third of clean energy jobs in Texas and California, Georgia, leading the country in planned jobs around cleantech, and available clean energy jobs in Minnesota growing nearly five times faster than the state's overall job numbers, illustrating the potential of the green economy to drive rapid job creation.

On November 7, 2024, at MassChallenge in Boston, authors Suchi Gopal and Josh Pitts launched their groundbreaking book, The Fintech Revolution: Bridging Geospatial Data Science, AI, and Sustainability, published by Springer. The event brought together leading voices in finance and technology, featuring a panel discussion with three distinguished experts who explored the book’s central themes and the transformative power of cutting-edge technologies.

Systemic risks are especially dangerous for pension funds, which rely on long-term stability to ensure workers' financial security during retirement. A sudden market shock can undermine years of careful investment planning, destabilizing the fund and jeopardizing millions of workers' retirement security. A primary source of systemic risk is climate change, which poses escalating threats. Climate-related events—such as extreme weather and environmental degradation—destabilize financial markets, disrupt essential systems like supply chains, infrastructure and housing, and jeopardize community health.

Rising temperatures, biological hazards and toxins, and extreme weather events are causing long-term health issues, such as respiratory and cardiovascular diseases, heat-related illnesses, and trauma-related conditions. Non-disabled workers in high-risk jobs are increasingly exposed to these hazards, leading to a growing population of climate-affected disabled workers.

Climate Finance Action (CFA) has curated essential resources that provide in-depth insights into responsible investment and climate finance to address this need. These resources clarify the most effective ways to implement ESG criteria, integrate climate risk management into decision-making, and understand how values-aligned investing can influence corporate behavior and foster resilience against climate risks.

At its core, mobilizing public capital means leveraging the financial power of these funds to fuel real change. Investing in clean energy and climate resilience can drive positive social and environmental outcomes and build a more equitable economy, filling critical gaps left by private investments. Additionally, public capital can encourage corporate accountability, promoting improved governance standards.

We're thrilled to announce a significant achievement in our ongoing work at Climate Finance Action. Our Executive Director, Mary Cerulli, has made a substantial contribution to the upcoming book FinTech Revolution: Bridging Geospatial Data Science, AI, and Sustainability, scheduled for release by Springer in 2024. This book, a unique exploration of how FinTech and emerging technologies are leveraged to tackle climate risks.

Time and again, worker pension funds have been invested in ways that directly undermine the workers who contribute to them. Some of this behavior is attributable to fiduciary duty drift - chasing returns and short-term results pressures. Realigning fiduciary duty with pension fund participants' and beneficiaries' actual economic interests is critically important for restoring worker confidence in their retirement funds and advancing worker interests in the 21st century. Whether by statute, interpretive letter, or investment policy reform, the time to act is now.

CFA Climate Chats bring together workers and experts to discuss the vital role that pension systems play in advancing climate action. In the first episode Beverly Ortiz, Organizing Director at Climate Finance Action speaks with Mike Powers, President, Service International Employees Union (SEIU) Local 503, OR. Mike Powers is an influential leader with over two decades of involvement with SEIU Local 503.

Climate action, workers' rights, and economic sustainability are interconnected. As communities face the dual challenges of environmental change and economic instability, we can help our colleagues and community members understand how these issues intersect and amplify one another. Discover five ways to frame the conversation around climate justice and financial security.

An inclusive economy is one where everyone can participate and thrive, regardless of background, identity, or socioeconomic status. This vision extends beyond economic growth, encompassing equitable access to resources, opportunities, and decision-making processes. Building an inclusive economy prepares not only companies but workers and families to adapt to the challenges of climate change which is essential for achieving climate justice.