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ESG

Investor coalition pushes power companies to decarbonize

A coalition of large institutional investors with a combined $1.8 trillion in combined assets is demanding that the 20 largest U.S. publicly traded electricity generators work toward net-zero carbon emissions and commit to doing so within six months.

The coalition is led by New York City Comptroller Scott Stringer, on behalf of the $63.8 billion New York City Employees' Retirement System, the $71.5 billion Teachers Retirement System of the City of New York and the $6 billion New York City Board of Education Retirement System. The climate crisis "is an imminent threat not only to our planet, but to pensions systems, and ultimately, our beneficiaries," Mr. Stringer said in a statement Thursday.

"This initiative makes clear that mobilizing for the planet goes hand-in-hand with protecting our pensions, and we need these commitments now," Mr. Stringer said.

According to the coalition, having the 20 largest electricity generators in the U.S. decarbonize would erase nearly half of the power sector's carbon emissions and set the course for a sustainable power grid.

Citing a recent Intergovernmental Panel on Climate Change report, the investors said in a statement, "We are on track to climate disaster, and we have just a decade to avert the worst of it."

In addition to the New York City pensions, the 20 signatories to the statement include the $354.7 billion California Public Employees' Retirement System, Sacramento, and the $34 billion Connecticut Retirement Plans and Trust Funds, Hartford.

They are also asking the utilities to implement four key governance reforms before issuing their 2020 proxy statements to achieve the net-zero target:

  • Identify the board member responsible for overseeing execution of the net-zero transition.
  • Publish a detailed transition plan to achieve net-zero emissions from electricity generation no later than 2050.
  • Incorporate transition milestones into executive compensation metrics.
  • Disclose how political, lobbying and trade association activities will be aligned with the net-zero commitment.

Coalition member New York State Comptroller Thomas P. DiNapoli credited the Climate Majority Project for providing a detailed plan to help the utility sector transition to net-zero emissions, which helps the New York State Common Retirement Fund push portfolio companies address climate risk and set lower emissions targets.