Key Takeaways
- • Maryland State Retirement and Pension System holds $74 billion in assets with 41% allocated to private markets (Real Assets, Private Equity, Absolute Return), compared to the 31% public pension average, exposing the fund to concentrated climate transition risks in illiquid holdings.
- • Private equity represents 21% of Maryland SRPS's portfolio—significantly higher than the 14% public pension average—with substantial positions in funds managing fossil fuel assets and energy companies identified in the Private Equity Climate Risks Scorecard and Global Energy Trackers.
- • Oregon Treasurer modeling demonstrates that over 80% of a state pension's apportioned emissions stem from private equity and real assets, illustrating the hidden climate exposure embedded in alternative asset classes and the opacity problem facing institutional investors.
- • Maryland SRPS has established a Climate Advisory Panel tasked with advising on climate-related investment risks and opportunities, positioning the fund to navigate the transition to a low-carbon economy as federal climate guidance dissipates and governance shifts to state-level institutions.
- • The 2026 Climate Risk Assessment acknowledges that institutional asset owners face structural challenges addressing climate issues across entire portfolios, with illiquidity and lack of transparency in private markets potentially obscuring material risks.
Summary
Maryland State Retirement and Pension System's significant overweighting toward private markets—41% of its $74 billion portfolio compared to a 31% public pension benchmark—has created concentrated exposure to climate transition risks that are difficult to monitor and measure. Within this allocation, private equity represents 21% of assets, well above the 14% peer average, concentrating exposure to funds that own or financially back numerous energy companies and fossil fuel assets highlighted in industry climate risk assessments.
The illiquidity and opacity of private market investments present a structural challenge for Maryland SRPS in identifying and managing climate-related financial risks. Evidence from Oregon's state pension system illustrates the magnitude of this problem: modeling by the Oregon Treasurer found that over 80% of the pension's apportioned emissions were attributable to private equity and real assets holdings. This data underscores that while public equity markets receive substantial climate-related scrutiny and disclosure, alternative asset classes often obscure material transition risks that could undermine long-term fund performance.
Recognizing these challenges, Maryland SRPS has made progress on climate governance by establishing a Climate Advisory Panel to advise on climate-related investment risks and opportunities within the system. This governance layer is particularly relevant given the 2026 Climate Risk Assessment's finding that "with federal guidance dissipating, climate governance is shifting toward state-level governments and institutional investors." Maryland's proactive stance aligns with the state's broader climate commitments, including the 2022 Climate Solutions Now Act, which targets 60% greenhouse gas emissions reductions by 2031 and net-zero emissions by 2045.
The report identifies concrete policy tools and standards that Maryland SRPS could adopt to address climate risks in private markets, including timelines to ensure meaningful progress. These recommendations reflect growing institutional recognition that climate change represents a systematic, un-diversifiable risk that will affect portfolio performance across all asset classes, making transparent measurement and active management of private market climate exposure essential for fiduciary responsibility and long-term value preservation.
The illiquidity and opacity of private market investments present a structural challenge for Maryland SRPS in identifying and managing climate-related financial risks. Evidence from Oregon's state pension system illustrates the magnitude of this problem: modeling by the Oregon Treasurer found that over 80% of the pension's apportioned emissions were attributable to private equity and real assets holdings. This data underscores that while public equity markets receive substantial climate-related scrutiny and disclosure, alternative asset classes often obscure material transition risks that could undermine long-term fund performance.
Recognizing these challenges, Maryland SRPS has made progress on climate governance by establishing a Climate Advisory Panel to advise on climate-related investment risks and opportunities within the system. This governance layer is particularly relevant given the 2026 Climate Risk Assessment's finding that "with federal guidance dissipating, climate governance is shifting toward state-level governments and institutional investors." Maryland's proactive stance aligns with the state's broader climate commitments, including the 2022 Climate Solutions Now Act, which targets 60% greenhouse gas emissions reductions by 2031 and net-zero emissions by 2045.
The report identifies concrete policy tools and standards that Maryland SRPS could adopt to address climate risks in private markets, including timelines to ensure meaningful progress. These recommendations reflect growing institutional recognition that climate change represents a systematic, un-diversifiable risk that will affect portfolio performance across all asset classes, making transparent measurement and active management of private market climate exposure essential for fiduciary responsibility and long-term value preservation.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.