State of OECD Pension Funds’ Climate Transition

This executive summary from the Climate Policy Initiative (CPI) analyzes the climate transition progress of 594 pension funds in OECD countries, representing USD 22.5 trillion in assets. Using the Net Zero Finance Tracker (NZFT), the report evaluates these funds across targets, implementation, and impact, highlighting a trend of increasing climate target adoption and improved risk management, while noting a persistent material exposure to fossil fuel expansion.

• OECD pension funds have increased the adoption of climate targets over the last five years, particularly regarding mitigation, though significant gaps remain in the quality and adoption of climate investment targets.
• There has been strong improvement in how pension funds integrate climate change into strategy and governance, specifically through the use of internal accountability frameworks, climate risk strategy, and climate risk management.
• Despite climate targets, pension fund energy portfolios remain heavily concentrated in fossil fuel expansion. Of 96 analyzed funds with USD 310 billion in energy investments, 55% (USD 169 billion) is in expansionist fossil fuel companies, while only 38% is directed toward clean energy companies.
• Pension funds' indirect energy investments—linked to equity holdings in listed companies—total USD 479 billion across 2,750 projects. Of this, 63% is classified as clean, 4% as transition, and 33% as fossil fuels.
• When pension funds embed climate considerations into their processes, they often match or exceed the ambition of other financial institutions, particularly in policy engagement, emissions disclosure, climate risk management, and fossil fuel exclusion targets.
• The adoption of targets, implementation measures, and transition plans correlates with a higher share of clean energy in portfolios. Funds that adopted these elements have an average clean energy share of 45-46%, compared to 27-29% for those that did not.
• Regulatory environments significantly impact pension fund behavior; countries with clear guidance, such as the Netherlands, Denmark, and the UK, see the highest levels of target setting and implementation.
• Pension funds are using three primary strategies to influence asset managers toward net zero: systematic engagement and active ownership, mandate termination (e.g., the People’s Pension and Akademiker Pension terminating mandates with State Street), and reallocation or internalization of asset management (e.g., PFZW reducing its equity portfolio from 3,500 to 800 names).

APA

Fabian, F., Parenti, C., Taylor, M., & Micale, V. (2025). State of OECD Pension Funds’ Climate Transition. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/1990/12/ES-State-of-OECD-Pension-Funds.pdf

Chicago

Fabian, Frederick, Claris Parenti, Maddy Taylor, and Valerio Micale. State of OECD Pension Funds’ Climate Transition. Climate Policy Initiative, 2025. https://www.climatepolicyinitiative.org/wp-content/uploads/1990/12/ES-State-of-OECD-Pension-Funds.pdf.

Wikipedia

{{cite report |last1=Fabian |first1=Frederick |last2=Parenti |first2=Claris |last3=Taylor |first3=Maddy |last4=Micale |first4=Valerio |title=State of OECD Pension Funds’ Climate Transition |publisher=Climate Policy Initiative |date=December 2025 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/1990/12/ES-State-of-OECD-Pension-Funds.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{fabian2025state, author = {Fabian, Frederick and Parenti, Claris and Taylor, Maddy and Micale, Valerio}, title = {{State of OECD Pension Funds’ Climate Transition}}, institution = {Climate Policy Initiative}, year = {2025}, month = dec, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/1990/12/ES-State-of-OECD-Pension-Funds.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }