Silent Portfolios, Softened Votes: Public Pensions’ Response to Anti-ESG Policies
By Joel F. Houston, Tao Li & Chuyi Sun
Using newly assembled holdings and proxy-voting data from July 2017 through June 2025, we examine how public pension funds respond to state anti-ESG policies and demonstrate how these responses depend on fund governance. We find no significant change in the ESG ratings of pension fund portfolios, but substantial declines in support for environmental and social shareholder proposals following policy adoption. Support for these proposals falls by 36.1 and 24.9 percentage points, respectively. The declines are greatest among funds that reclaim voting authority from external managers while considerably smaller among those that continue to delegate voting. We also find that funds with greater political representation on their boards exhibit smaller declines in support. Interestingly, these funds were less likely to support environmental and social proposals before the anti-ESG policies were adopted, suggesting that their voting practices were already more closely aligned with state political preferences.
Source SSRN
