This Perspective examines climate oversight in the world’s largest pension and sovereign wealth funds. These institutions collectively manage tens of trillions of dollars, yet they remain structurally under-allocated to climate-aligned investments. Conventional equities, bonds, and real assets still dominate their portfolios, while assets identifiable as low-carbon, climate solution, or otherwise sustainability-related usually account for only a modest share of total holdings. The misalignment reflects governance and portfolio design constraints, including benchmark dependence, fiduciary interpretation, legacy sectoral exposures, and, in some sovereign funds, continued fiscal linkage to fossil fuel revenues. This article compares climate-aligned allocation levels and climate-risk exposure across 15 major pension and sovereign wealth funds using a harmonized public-disclosure framework and a composite climate-risk proxy derived from governance strength, carbon intensity, and transition readiness. The analysis reveals a persistent climate finance gap, with most funds far below the allocation levels required to align with global net-zero pathways. The findings support the argument that climate finance should be understood as a mechanism of strategic capital reallocation through which institutional investors can reduce transition and physical climate risk while enhancing long term portfolio resilience. This article contributes to the literature on sustainability-oriented financial transformation by clarifying the governance logic of persistent carbon exposure and by documenting the scale and structure of the climate finance gap in the world’s largest investment portfolios.