Pension Funds

NYC issues RFP for help with fossil fuel divestment

The New York City Retirement Systems is seeking one or more financial advisers to assist in divesting investments in fossil fuel companies.

The RFP — issued by Scott Stringer, the city comptroller and fiduciary to the five pension funds within the $200.8 billion system — calls for the "investment and fiduciary analysis of prudent strategies" to divest fossil fuels, a policy advocated by Mr. Stringer and by New York City Mayor Bill de Blasio.

"By moving toward a fossil fuel-free investment strategy, New York City is planting the seed for a clean, green and thriving economy that can truly support future generations," Mr. Stringer said in a news release Tuesday.

"Divestment is a critical part of our strategy to fight climate change while insulating our pension funds," Mr. de Blasio said in the news release.

The RFP is supported by three of the pension funds within the city system — New York City Employees' Retirement System, the Teachers Retirement System and the Board of Education Retirement System — representing about 70% of aggregate assets.

Pension funds representing police and firefighters are not participating; they announced their opposition to divesting fossil fuel investments earlier this year. The boards representing these two groups will evaluate information as it becomes available, Tian Weinberg, a spokeswoman for Mr. Stringer, said in an interview.

Although the comptroller's bureau of asset management supervises all investment activity, the separate boards of the pension funds make the final decision on respective investments for their members.

Divestment is defined as "the reduction of the proportional weight in the (retirement) systems' portfolios of securities to a level below their proportional weight in total market capitalization," the RFP said. Divestment could go as far as excluding such investments from the portfolio "through withdrawing from current investments as well as excluding new investments," the RFP said.

For divesting purposes, the comptroller's office defines "fossil fuels" as coal, oil and gas used for energy. Candidates for divesting would be companies that own fossil fuel reserves.

In January, Mr. Stringer and Mr. de Blasio announced the pension system would take steps to examine how to divest fossil fuels.

At the time, the comptroller's office estimated fossil fuels accounted for about $5 billion of total system assets invested among 190 companies. The firm or firms hired through the RFP will enable the pension system to prepare a more definitive account, Ms. Weinberg said.

"The RFP will result in a comprehensive analysis of the city pension funds' holdings and the risks the fossil fuel industry poses to pension assets," the news release said. "This analysis … will inform the development of a comprehensive and prudent divestment strategy to preserve the retirement funds of city employees and address climate change risks, consistent with fiduciary duty."

The RFP is available on Mr. Stringer's website. Proposals are due Feb. 8 by 2 p.m. EST. The contract will take effect Dec. 1, 2019, and will run for one year with an option to renew for two additional years.