New Report: $192B Washington State Pension Fund is Failing to Address Climate Change, Putting Members’ Savings at Risk

SEATTLE, WA — Today, 350 WA, the Washington State Chapter of the Sierra Club, and a network of climate and pension advocacy groups based in Washington State released a report analyzing how the $192 billion Washington State Investment Board (WSIB) used its shareholder voting power to support or oppose climate-related shareholder resolutions and corporate director votes in 2022. The report analyzes WSIBs voting record in four sectors that are key to decarbonizing the global economy: the banking and insurance sectors, the fossil fuel industry, and major utility companies.

• Read the full report Making Washingtonians’ money matter: How our state pension is failing on climate

“Climate change not only poses grave risks to all life on earth, it also poses severe risks to our economy,” said Stop the Money Pipeline co-director and report author Alec Connon. “The Washington State Investment Board is tragically failing to realize that, regularly voting against common sense shareholder resolutions at some of the companies most responsible for exacerbating the climate crisis and environmental racism. I doubt that is how the majority of public employees and retirees would want their money to be used. In 2023, WSIB must do better and that starts with how it votes at the shareholder meetings this spring.”

“When faced with the systemic risks of fossil fuels to our planet and economy, fiduciary duty requires the Washington State Investment Board to advocate for a just and orderly transition off fossil fuels,” said Sept Gernez, Interim Director of the Washington State Chapter of the Sierra Club. “WSIB has consistent opportunities to protect Washingtonians’ pension returns and the climate, and it must do right by its beneficiaries and our state by supporting the critical climate and Indigenous-led shareholder proposals introduced in 2023.”

Key findings include:

• WSIB voted against climate-related resolutions at major utility and fossil fuel companies, including a resolution that urged ExxonMobil to develop a plan to lessen its dependency on fossil fuel
• WSIB opposed resolutions at banks and insurance companies that called on the corporations to take the actions required to limit global warming to 1.5°C
• WSIB opposed an anti-greenwashing resolution at JPMorgan Chase, the world’s largest funder of fossil fuels; the resolution called on the bank to use absolute emissions metrics when setting climate targets rather than the weaker “carbon intensity” targets, as expert groups have stated is essential if climate commitments are to be deemed credible
• WSIB opposed resolutions that urged Wells Fargo and Citigroup to do more to ensure that their oil and gas clients are respecting Indigenous peoples’ right to Free, Prior and Informed Consent
• The climate-related shareholder resolutions opposed by WSIB were supported by many of its peers, including the state pension funds of New York, Massachusetts, Connecticut, and Illinois.
• WSIB voted in favor of corporate directors at US fossil fuel companies and utilities across the board

The report concludes with nine recommendations the Washington State Investment Board should implement to address the climate crisis and mitigate climate-related financial risk to its members’ savings, including:

• Update their proxy voting guidelines
• Support climate and Indigenous rights resolutions in 2023
• Oppose directors who are failing to steward their company through the energy transition in line with a 1.5°C pathway
• Engage with State Street Global Advisors, ISS and Glass Lewis on climate change
• Join the Net Zero Asset Owners Alliance
• Divest from fossil fuels
• Ensure that private market investments align with a 1.5°C pathway

The report has been endorsed by WFSE 1495, a union that represents around 2,000 pension fund members, as well as Washington Physicians for Social Responsibility, Sierra Club - Washington Chapter, Puget Sound Advocates for Retirement Action, Mazaska Talks, Divest WA, and the national organizations Union of Concerned Scientists, Stand.earth, Oil Change International, Rainforest Action Network, Public Citizen, the Sunrise Project, Public Citizen, and Reclaim Finance.

The report comes just one month before WSIB will cast votes on a series of climate and Indigenous rights resolutions during shareholder season 2023. In particular, WSIB will once again cast votes on resolutions calling for banks to use absolute emissions metrics when setting their climate targets, resolutions calling on banks and insurance companies to create policies for a time-bound phase-out of financing for fossil fuel expansion, and a series of resolutions on Indigenous rights. A national coalition of 240+ organizations is running a campaign to encourage major shareholders, such as the Washington State Investment Board, to support the climate and Indigenous rights resolutions this year.

See a full list of quotes from partners, including WFSE, WSIB, Mazaska Talks, Washington Physicians for Social Responsibility, Puget Sound Advocates for Retirement Action, Climate Safe Pensions Network, Stand.earth, Rainforest Action Network, and Union of Concerned Scientists.

BACKGROUND

The Washington State Investment Board (WSIB) manages more than $192 billion of state retirement plans, insurance funds, and other public assets ― money that it manages on behalf of 552,000 retirement plan beneficiaries and public trust stakeholders. WSIB has a fiduciary duty to protect its beneficiaries’ savings, including against systemic, economy-wide financial risks, such as those posed by climate change

In 2021, the global financial giant, Swiss Re, conducted a rigorous analysis of how 48 economies would be impacted by climate change under four different temperature increase scenarios. In the most severe scenario they assessed ― a 3.2°C increase in temperatures by 2050 ― global economic value is predicted to shrink by eighteen percent, shaving some $23 trillion from the global economy. Even if global warming is limited to 2°C, a goal that would require urgent action, global economic value is likely to decrease by eleven percent, wiping trillions from the marketplace.

As a major investor in sectors that are critical to decarbonization efforts, WSIB has the opportunity to protect its members’ savings and the broader economy from climate-related financial risk in two important ways: voting on shareholder resolutions that move companies toward Paris-alignment and against corporate directors who are failing to steward their companies through the energy transition.

Shareholder resolution votes and corporate director elections happen each year during what is often called “shareholder season”, the time of year when virtually every major publicly-traded company in America hosts its Annual General Meeting (AGM).

Between April and May, most of the companies analyzed in this report will have their 2023 AGMs where WSIB will once again vote on a slate of climate-related shareholder resolutions and corporate director elections. The 2023 climate resolutions filed at banks and insurance companies can be viewed here and here.  As of June 30, 2021, WSIB held close to $2 billion worth of shares in the six banks analyzed in the report.

350 WA is committed to analyzing how WSIB votes on climate-related resolutions in the banking, insurance, fossil fuel, and utility sectors in 2023.