NYC retirement funds increased climate investment by 25%

The New York City retirement systems increased their investments in climate solutions by 24.7% in fiscal 2023, according to city comptroller Brad Lander. The city’s retirement portfolio of climate investments stood at $10.5 billion as of June 30.

“Preserving a livable planet and a thriving economy will require a collective global commitment both to the phase-out of fossil fuels and to massive new investments in renewable energy and innovative climate solutions,” Lander said in a statement Tuesday.

The announcement was timed to coincide with the close of the United Nations climate change conference (COP28), where officials from around the world made commitments to “laying the ground for a swift, just and equitable transition, underpinned by deep emissions cuts and scaled-up finance.”

Climate solution investments are one of the key pillars of the city’s strategy of reaching net zero gas emissions, Lander noted.

The climate solutions in the city’s retirement portfolio include investments in companies that receive their revenue from climate mitigation, adaptation and resilience activities, such as renewable energy, energy efficiency, pollution prevention and low-carbon buildings, according to the comptroller’s office.

Since 2018, the city’s investments have increased more than five-fold, with a goal of reaching $50 billion by 2035.

The city has also made commitments to divest from fossil fuels, disclose annual emissions and work with portfolio and asset managers to set and achieve science-based targets to reach net zero.

In April, two of the city’s pension funds established plans to reach net zero emissions in their investment portfolios by 2040. 

Trustees for two of the city’s five pension systems — the New York City Employees’ Retirement System and the Teachers Retirement System — agreed to the goals.

The New York City Board of Education Retirement System agreed earlier to divest from securities related to fossil fuel companies.

The police and fire pension funds are not involved in any of the actions.

As of June 30, the five funds had $253 billion in assets under management and were the fourth-largest public pension plan in the United States.

“We’re thrilled to be growing our climate solutions investments at the scale necessary to safeguard the long-term future of the systems’ portfolios and our planet,” Lander said.

The city is one of the biggest issuers of municipal bonds in the nation. Its general obligation bonds are rated Aa1 by Moody’s Investors Service, AA by S&P Global Ratings and Fitch Ratings and AA-plus by Kroll Bond Rating Agency.

In the second quarter of fiscal 2023, the city had about $39.3 billion of GO bonds outstanding. Separately, the city’s Transitional Finance Authority has about $45.1 billion of debt outstanding as of the second quarter of fiscal 2023, while the Municipal Water Finance Authority has around $32.3 billion of outstanding debt.