Two of the five pension funds in the New York City Retirement Systems announced Wednesday they have implemented plans to achieve net-zero emissions in their investment portfolios by 2040.
The actions by the New York City Employees' Retirement System and the Teachers' Retirement System of the City of New York represent a follow-up to an environmental investing goal they established in October 2021. They requested the city comptroller's office to devise the net-zero plan.
The pension funds "put a lot of time and thought into this process," Brad Lander, the city comptroller and trustee for the five pension funds, said in an interview.
The plans "incorporate an engagement approach — not just portfolio management," he said.
Each of the five pension funds in the $248.2 billion New York City Retirement Systems has an independent board of trustees.
The trustees of the $79.3 billion employees' pension fund approved the net-zero plan in February. The trustees of the $93.4 billion teachers' pension fund voted for their plan Tuesday.Trustees of another pension fund that also announced a net-zero commitment in October 2021 — the $8.3 billion New York City Board of Education Retirement System — are expected to vote on their implementation plan next month, Mr. Lander said.
He described the discussions between the comptroller's office and the various pension funds' trustees as "robust."
He noted that red state government officials' attacks on ESG are "relevant here" because some asset managers have been hesitant about climate change-related investment guidelines. Officials of the comptroller's office and the employees' pension fund showed the net-zero plan to a sampling of asset managers prior to the Wednesday announcement. None objected, Mr. Lander said.
In the pursuit of the pension system's fiduciary duties, "we won't be distracted" by politicians' attacks on ESG investing, he said during a news conference.
According to a comptroller's office news release, the net-zero implementation plan contains four broad strategies:
Mr. Lander said the pension funds will use divestment if other efforts fail. "We need an engagement strategy," he said. "Divestment is a possibility."
The two other pension funds in the city system — the $48.9 billion New York City Police Pension Fund and the $18.4 billion New York City Fire Pension Fund — aren't participating in the net-zero plans. However, their trustees have agreed to set climate solution investment targets, Mr. Lander said.
The three pension funds favoring the net-zero strategy set a goal in October 2021 of investing $37 billion in climate-friendly investments by 2035, Mr. Lander said. Adding the investment goals for the police and fire pensions funds, the total for all pension funds is $50 billion by 2035, he said.
The comptroller will publish an annual progress report "including status of interim emissions benchmarks, carbon footprint analysis, climate change solution investments, asset manager alignment, and corporate engagement," said a Wednesday news release from the comptroller's office.
