Video: Public Pensions and the Prisoner’s Dilemma - Part 2
Video Transcript:
In a previous video, we talked about public pension fudns and the prisoner’s dillemma. Now, just briefly, let’s continue that conversation. Unlike short-term investors, public pension funds are investing for decades. That perspective gives them both the incentive and the responsibility to address systemic risks that threaten the long-term health of the market and the retirement security of millions of workers.
Systemic risks like climate disruption, widening inequality, and political instability can’t be diversified away. They affect the entire system. If the economy falters because of the unchecked impact of climate change, even the best-managed portfolios will feel the shock.
That’s why pension funds that voice conviction through engagement coalitions, proxy voting, and policy advocacy help change the equilibrium. They demonstrate that cooperation is strategic, influencing corporate behavior, demanding transparent risk reporting, and pushing asset managers to align with climate transition plans and governance standards that benefit all investors.
Breaking out of the Prisoner’s Dilemma requires trust, transparency, and alignment. In the context of public pension funds, that means:
• Information sharing
• Intentional voting and dialogue
• Encouraging consistent governance and fiduciary guidance
When pension funds pursue shared goals, they shift the game from short-term competition to long-term stability. It’s the difference between two prisoners turning on each other and both losing, and two trustees recognizing that they’re better off cooperating to safeguard the entire system.
