FOR IMMEDIATE RELEASE: Jan. 16, 2025
CONTACT
Carter Dougherty
carter@ourfinancialsecurity.org
New Report Provides Roadmap for States to Protect Pensions from Federal Threats
Washington, D.C. — State policymakers and pension officials should use all the tools at their disposal to protect public pensions from federal threats and safeguard their ability to make investment decisions that promote retirement with dignity and economic security, according to a new policy roadmap released by the Americans for Financial Reform Education Fund.
These threats are part of a broader campaign backed by fossil fuel and other corporate interests that aims to slow the clean energy transition, curtail labor power, and reverse corporate progress on racial justice, workplace diversity, and worker protections. (It is often called the anti-ESG campaign; ESG stands for “environmental, social, and governance,” which are factors investors and companies use to assess risks and opportunities.)
The report identifies three central threats to the ability of state and local pensions to make investment decisions that benefit workers whose deferred wages make up these funds: misguided anti-ESG pension-related policies, financial deregulation, and the effects of the anti-ESG campaign on large asset managers.
It also provides a roadmap state legislatures, governors, state attorneys general, state and local treasurers and comptrollers, pension fund trustees, and pension fund staff can follow to protect pensions against these attacks and expand their ability to make investment decisions in their beneficiaries’ best interest.
“Fossil fuel and other corporate interests have made clear they want the incoming presidential administration to strangle pensions’ right and ability to make investment decisions that benefit workers, whose deferred wages make up these funds, and their communities,” said Natalia Renta, the report’s author and associate director of corporate governance and power at Americans for Financial Reform Education Fund. “States must fight back against these federal threats and defend their pensions.”
“Public pensions are a cornerstone of retirement security for millions of workers and a driver of local economies, but they are under relentless attack. When lawmakers play politics with working people’s pension plans by restricting consideration of environmental, social and governance (ESG) risks in investment and proxy voting decisions, they threaten not only retirees but also the greater good,” said Randi Weingarten, American Federation of Teachers President.
“Shielding public pensions from baseless attacks that limit their freedom to invest in the best interests of their members and beneficiaries must remain a priority for State policymakers and pension officials as attacks on responsible investing continue. Thank you to Americans for Financial Reform Education Fund for this practical roadmap which underscores the urgency of ensuring pension funds are equipped with autonomy in making investment decisions that prioritize long-term retirement security,” said New York City Comptroller Brad Lander.
“The bottom line we have to remember is that public pension capital is first, foremost, and always workers’ money—this report reminds us of all the tools pension fund trustees and staff have at their disposal to protect that,” said Renaye Manley, finance and pension funds fellow at the Center for Labor and a Just Economy at Harvard Law School.
“The devastating fires in Los Angeles are yet another tragic reminder of the urgent need to protect communities—and people’s hard-earned savings—from the escalating impacts of climate change. Across the country, public pensions have a responsibility to safeguard workers’ long-term financial security, which includes addressing climate risks and other systemic threats to our economy. To ensure their constituents can live and retire with dignity, state pension leaders must stand up to attacks by corporate polluters and their political allies, and take proactive steps to help mitigate climate risks and invest in a more sustainable future,” said Ben Cushing, campaign director at the Sierra Club.
“Public pensions play a crucial role in stewarding the retirement savings of millions of Americans, and we are all better off when capital markets are well regulated and transparent. Pension funds have entrusted billions of dollars to private markets, where illiquidity, opacity and extractive business models not only expose workers’ retirement savings to unnecessary risk – they also pose significant risks to the communities in which they invest. Private equity managers must be accountable to pensions and the public, through stronger policies and disclosures that ensure they address climate, labor and housing risks and impacts,” said Chris Noble, Policy Director for the Private Equity Stakeholder Project
“When an unchecked administration is poised to dissolve the regulatory guardrails that protect long-term sustainable value creation, public pension funds must not retreat. Rather, they must exert increased scrutiny over capital market actors and confront the concentrated power of the largest asset managers who operate as unappointed quasi-regulators of governance standards. We will win when public pension funds — the foremost stewards of the people’s capital — harness their collective power as clients to demand that asset managers live up to their fiduciary duties to long-term investors,” said Bryant Sewell, Co-Executive Director at Majority Action.
This report was written by Natalia Renta with research support from Meron Lemmi. It was edited by Partick Woodall, Lisa Donner, and Alex Martin. AFR would like to thank Danielle Fox (Climate Finance Action), Jordan Haedtler, Edgar Hernandez (Service Employees International Union), Jim Kane (National Education Association), David Kazansky (American Federation of Teachers), Louis Malizia (SOC Investment Group), Renaye Manley (Center for Labor & a Just Economy), Michael Musaraca, Tejal Patel (SOC Investment Group), Brandon Rees (AFL-CIO), Michael Ring (Service Employees International Union), and Frances Sawyer (Pleiades Strategy) for their careful review and valuable feedback.
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