New York City comptroller announces new ESG goals for pension systems
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Citing “rollbacks in the face of myopic right-wing pushback against responsible fiduciary investing,” New York City Comptroller Brad Lander said Wednesday that two of the city’s pension funds have established new plans to reach net zero emissions in their investment portfolios by 2040.
“If the cynical war of political distraction waged by red-state politicians at the behest of their fossil-fuel donors deters us, we will sacrifice our opportunity to maximize long-term investment returns along with millions of lives and trillions of dollars of global investment,” Lander said in a statement.
Lander is fiduciary for the city’s five pension funds.
Trustees for two of the city’s five pension systems — the New York City Employees’ Retirement System and the Teachers Retirement System — agreed to Wednesday’s new 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 January, the five funds had $265.9 billion in assets under management and were the fourth-largest public pension plan in the United States.
Lander said the pension funds adopted a measurable and transparent plan that could serve as a model for other investors given the prevalence of “greenwashing” by some corporations that announce net zero goals, but show no intention of actually reaching them.
In 2015, NYCERS and TRS divested from thermal coal and between 2017 and 2022 the funds conducted climate risk assessments, divested from fossil fuel reserve owners and doubled investments in climate solutions.
In 2021, the funds committed to reaching net zero by 2040 and set a goal of investing $36 billion in investments by 2035.
Trustees directed the comptroller — who serves as investment adviser, custodian and a trustee of the funds — to develop an implementation plan to reach that goal across their portfolios.
The plans includes four strategies that the pension funds will employ to prudently achieve net zero emissions: disclose emissions and set interim targets; engage portfolio companies and asset managers to be net zero-aligned; Invest in climate change solutions; and divest to reduce risk.
Lander urged other pension systems to follow the city’s lead.
“The Net Zero Implementation Plans are a tangible, measurable roadmap toward decarbonization across our investment portfolio and the global economy,” Lander said. “This ‘high ambition’ plan is also a call for partnership with other pension funds, asset managers, financial firms, and portfolio companies. The climate crisis cannot be effectively addressed in silos.”
Environmental, social and governance issues have become a flashpoint for political action across the country — dividing red states that cite dependence on fossil fuel industries to provide jobs and economic stability and blue states where elected officials want to show concern about air and water pollution problems.
In Florida the Legislature is considering laws that would ban the use of ESG issuance in the state.
Also, the Florida Treasury joined other states in divesting up to $2 billion of assets that are under management by BlackRock because of its stance on environmental, social and governance issues, Florida’s Chief Financial Officer Jimmy Patronis has said.
