New York City Comptroller Brad Lander, the fiduciary for the $274.4 billion New York City Retirement Systems, has proposed ending future private markets investments in midstream and downstream fossil fuel infrastructure by the system's pension funds.
If adopted by the retirement system’s trustees, the policy would expand the funds’ divestment from fossil fuel reserve owners and exclusion of upstream fossil fuel investments in private markets to also cover midstream and downstream infrastructure, such as pipelines and distribution terminals, according to an Oct. 22 news release.
New York City Retirement Systems comprises five public pension funds. Three of the funds — New York City Employees’ Retirement System (NYCERS), Teachers’ Retirement System (TRS) and Board of Education Retirement System (BERS) — have already previously divested from fossil fuel reserve owners in their public equities portfolios and voted to exclude upstream fossil fuel investments (like exploration and extraction) in their private markets investments. The three pension funds divested about $4 billion in fossil fuel holdings from their public portfolios in 2021.
Lander’s new proposal would expand this exclusion to include a prohibition on future investments in midstream and downstream infrastructure, such as pipelines and liquefied natural gas terminals, in their funds’ private equity and infrastructure portfolios.
“Climate risk is financial risk, and we have a fiduciary duty to our beneficiaries to take that risk seriously as we make long-term investment decisions,” said Lander in the release. “The impacts of the climate crisis are playing out in real time, with more frequent hurricanes, flash floods, intense heat waves and deteriorating air quality jeopardizing our planet and our portfolios.”
Lander added that excluding pipelines and LNG terminals from future investments “will help mitigate the systemic risks that climate change poses to the global economy and to New York City’s public pension funds."
These exclusions are part of the funds’ broader Net Zero Implementation Plans, which were adopted in 2023.
Tom Sanzillo, director of financial analysis at the Institute for Energy Economics and Financial Analysis, as well as a former New York State first deputy comptroller, said in the release that while the private equity sector has proven to be an “important asset for institutional investors like the New York City pension funds, the industry nevertheless has chosen to remain the least transparent of any sector in institutional portfolios.”
Sanzillo further added that: “Midstream and downstream companies, along with the entirety of the fossil fuel industry, remain a financial poor performer. … Fossil fuel companies, be they private or public equity performers, remain a sector in secular decline.”
Loren Blackford, acting deputy executive of environmental group Sierra Club, said in the release that “this new policy would help address the growing role of private market investments in financing dirty fossil fuel projects and enabling major polluters that operate with little transparency.”
The NYC comptrollers office could not be immediately reached for further details.
