The New York State Teachers' Retirement System, Albany, has frozen $1.04 billion in fossil fuel company investments and will divest $66.3 million in fossil fuel holdings as part of a new policy on climate change-impact investing.
The $148.1 billion pension system's governing board announced the policy following a Dec. 28 board meeting. According to a news release, the board:
- Will divest its holdings in publicly traded companies that derive more than 10% of their revenue from thermal coal.
- Has created a restricted list of companies within the system's portfolio for which the pension system will freeze "or prohibit directly held internal and passive external equity portfolios from further purchases of certain carbon-intensive fossil fuel holdings."
- Will conduct engagement efforts with the companies on the restricted list on their climate transition plans.
The board did not identify the companies on the restricted list or those subject to divestment, and it didn't set a timetable for divesting.
The pension system "will implement the divestment action plan in a timely and prudent manner," spokeswoman Heidi Brennan wrote in an email. "Following that procedural process, the system will disclose the names of those companies."
Ms. Brennan added that details on the engagement process will be publicized "in the coming weeks," including the governing board's consideration of a revised stock proxy voting process at its Jan. 27 meeting.
"The board and staff will regularly update the restricted list and will monitor related events that could have an impact on the system," she wrote.
According to the news release, the initial restricted list covers:
- The 10 largest positions in companies that have more than 0.3 gigaton of potential carbon dioxide emissions from thermal coal reserves.
- The 10 largest positions in companies that derive more than 20% of their revenue from oil and gas, or have more than 0.1 gigaton of potential carbon dioxide emissions from oil and gas reserves.
- Companies that derive more than 10% of their revenue from activities related to oil sands.
"NYSTRS understands its important responsibility as an institutional investor to actively pursue the path to
a climate-conscious future," Thomas K. Lee, executive director and CIO, wrote in a Dec. 28 letter to state legislators describing the new policy.
"This initial climate action plan squarely puts the system on that path while remaining consistent with NYSTRS' fiduciary duties," he wrote. "The Board is committed to remaining engaged in a comprehensive, deliberative process to evaluate the long-term impact of climate change on the system's investments."
The letter to legislators added that the board plans to "complete due diligence of the oil sands industry" by the end of 2022, with a recommendation for action by the January 2023 board meeting.
The board also will "develop a divestment policy to guide future engagement activities and divestment decisions," while the system continues to look for "climate-friendly investment opportunities," the letter said.
The board also plans to review its fixed-income and private equity investments "for climate-related risks and opportunities," the letter said.