Dive Brief:
- Asset managers lacking credible net-zero plans and found to be out of compliance with New York City’s broader climate goals are at risk of being dropped from the city’s public pension funds, NYC Comptroller Brad Lander warned Tuesday.
- Asset managers overseeing the New York City Employees Retirement System, Teachers Retirement System, and Board of Education Retirement System will be required to submit a written plan describing their decarbonization strategies and efforts to incorporate climate change-related risks into investment decisions by June 30.
- The city comptroller is also asking firms like BlackRock — manager of around $16.8 billion on behalf of NYCERS, down from $19 billion last year — to ask portfolio companies to “at minimum” measure and report scope 1, 2 and 3 emissions; establish a comprehensive net-zero and decarbonization plan; consider the transition to a low-carbon business model; and “align future capital expenditures and lobbying with climate goals and targets.”
Dive Insight:
All three pension plan systems have committed to a net-zero implementation plan to align with the city’s broader goal of achieving net-zero greenhouse gas emissions across its public pension funds by 2040. The plan, adopted when Lander became comptroller in 2022, already required public markets asset managers to submit net-zero plans to the comptroller’s office by June this year.
Lander, who is also running in the Democratic primary for mayor of New York City, said asset management firms must establish net-zero plans that align with the city’s 2040 climate goal. If managers fail to do so by the given deadline, the city comptroller said they’d risk losing their mandates for the three public pension plans.
“Our new standards demand that the retirement systems’ managers strengthen their net zero plans consistent with their fiduciary duty — or we will find new asset managers who will,” Lander said in an April 22 statement.
Asset managers will be required to engage with portfolio companies to “drive real economy decarbonization, not just portfolio decarbonization,” according to Lander’s letter to firms. Additionally, firms must adopt a stewardship strategy that prioritizes advancing decarbonization strategies.
This isn’t the first time the NYC comptroller has proposed actions to lower the carbon footprint of the city’s pension plans.
Last year, Lander issued a proposal that would stop NYCERS, TRS and BERS from future private equity and infrastructure portfolio investments in midstream and downstream fossil fuel infrastructure like pipelines and liquefied natural gas terminals.
The move, announced in October, built on the funds’ prior decisions to divest from fossil fuel reserve owners and exclude upstream fossil fuel investments in activities like extraction and exploration.
Lander’s letter came on Earth Day and a day after the New York State Common Retirement Fund announced it had committed around $2.4 billion to three funds focused on climate and sustainable solutions. The investment builds on the state pension plan’s broader goal of committing $40 billion toward sustainable funds and efforts to address climate risk by 2035.
