State of OECD Pension Funds' Climate Transition: Insights and Recommendations from the Net Zero Finance Tracker

This report analyzes the climate transition progress of 594 pension funds in OECD countries, representing USD 22.5 trillion in assets, using data from the Net Zero Finance Tracker (NZFT). It evaluates funds across targets, implementation, and impacts, finding that while target-setting is increasing, significant fossil fuel exposure remains, and progress is heavily dependent on mandatory regulatory frameworks.

• An analysis of 594 pension funds in OECD countries, managing USD 22.5 trillion in assets, shows that while funds are improving climate target-setting—particularly for mitigation—significant gaps persist in 2024 regarding climate investment targets.
• Pension funds maintain substantial exposure to fossil fuels. Among 96 entities with USD 310 billion in energy investments, 55% (USD 169 billion) is held in expansionist fossil fuel companies whose activities conflict with the International Energy Agency’s net-zero scenario, while 8% (USD 24 billion) is in non-expansionist companies and 38% is in clean energy.
• Pension funds that embed climate goals into governance and investment processes perform as well as or better than other financial institutions on climate indicators. These funds typically have higher clean technology exposure in their energy portfolios (38%) compared to other financial entity types (26%).
• The adoption of transition plans, implementation measures, and climate targets is linked to actual portfolio shifts, specifically a higher share of clean energy holdings.
• Regulatory environments significantly impact climate action; funds in the UK, Denmark, and the Netherlands show stronger targets and implementation due to clear guidance. Conversely, voluntary or fragmented regimes hinder progress, suggesting a need for regulators to mandate climate risk management as a fiduciary duty.
• European pension funds outperform those in Asia and North America on disclosure and stewardship policies, the latter often facing political or legal constraints on ESG integration. Large funds are driving change by tightening manager mandates, using climate-aligned voting, or internalizing assets for more control.

APA

Climate Policy Initiative (2025). State of OECD Pension Funds' Climate Transition: Insights and Recommendations from the Net Zero Finance Tracker. https://www.climatepolicyinitiative.org/publication/state-of-oecd-pension-funds-climate-transition-insights-and-recommendations-from-the-net-zero-finance-tracker/

Chicago

Climate Policy Initiative. State of OECD Pension Funds' Climate Transition: Insights and Recommendations from the Net Zero Finance Tracker. 2025. https://www.climatepolicyinitiative.org/publication/state-of-oecd-pension-funds-climate-transition-insights-and-recommendations-from-the-net-zero-finance-tracker/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=State of OECD Pension Funds' Climate Transition: Insights and Recommendations from the Net Zero Finance Tracker |date=16 December 2025 |url=https://www.climatepolicyinitiative.org/publication/state-of-oecd-pension-funds-climate-transition-insights-and-recommendations-from-the-net-zero-finance-tracker/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2025state, author = {{Climate Policy Initiative}}, title = {{State of OECD Pension Funds' Climate Transition: Insights and Recommendations from the Net Zero Finance Tracker}}, institution = {Climate Policy Initiative}, year = {2025}, month = dec, url = {https://www.climatepolicyinitiative.org/publication/state-of-oecd-pension-funds-climate-transition-insights-and-recommendations-from-the-net-zero-finance-tracker/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }