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Asset Allocation

NY to Investigate Coal Investments to See If Green Efforts Are Improving

Move is a step in the New York State Common Retirement Fund’s overall plan to decarbonize its portfolio.

By Steffan Navedo-Perez

The New York State Common Retirement Fund (CRF) announced it will launch a thorough review of its coal investments to ensure they’re realigning their business models to be more sustainable and supporting the development of tomorrow’s low-carbon economy.

“We are assessing minimum standard for transition readiness at coal mining companies first, because they face the greatest risk as the world turns to cleaner and renewable energies,” New York State Comptroller Thomas P. DiNapoli said in a statement. Any laggards would face risk of divestment from the fund.

The announcement is a step in the CRF’s overall plan to decarbonize its portfolio, after a six-member advisory group warned the fund last year to have 100% sustainable investments by 2030.

The fund has been taking major steps lately to fully realize these low-carbon aspirations. After DiNapoli announced intentions to spearhead a doubling of the pension plan’s environmental, social, and governance (ESG) funding to $20 billion, the pension appointed its first ESG director to help advance the green agenda.

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The CRF sent a survey due in mid-February asking the coal companies in question to align their business models with standards set by the Paris Agreement. Among the concerns being evaluated are a reduction in capital expenditures on coal, setting long-term targets to reduce greenhouse gas emissions, improving climate reporting, and increasing revenue from low-carbon or green technologies. 

“This is an important step in the right direction as this new standard will help New York State Common Retirement Fund reduce its climate-related risks associated with fossil fuel companies and implement its climate action plan,” said Ceres CEO and President Mindy Lubber. “It will also ensure that the Fund invests in transition-ready companies, and not in companies whose future is tied to thermal coal mining, which has a dim future in light of the accelerating transition to a sustainable, net-zero emissions economy.” 

CRF is a member of the Ceres Investor Network on Climate Risk and Sustainability.

The fossil fuel divestment movement has been gaining traction, as many UK public universities committed to doing the same, as well as a UK pension scheme earlier this week. 

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Home > News > Asset Management Culture > M&A Will Rise in 2020, Just Not as Fast, Survey Says
Asset Management Culture

M&A Will Rise in 2020, Just Not as Fast, Survey Says

Deloitte poll finds that 63% of dealmakers look for more activity this year, down from 2019’s expectations.

By Larry Light

The deal mania that has animated corporate America for the past few years is poised for a small deceleration, but it still will be pretty darn strong, according to consulting firm Deloitte.

In its annual poll of corporate executives and private equity firms, 63% of respondents said that mergers and acquisitions activity will increase somewhat, or significantly, in 2020, as opposed to 79% a year ago. Among corporations, divestitures remain popular, thus providing good deal fodder for acquisitive companies and PE outfits. Some 75% of executives expect to pursue them in 2020, the second highest level in four years.

Although the economic outlook appears better than it did from last year’s vantage point, poll respondents factored in the possibility of a slowing economy’s effect on M&A. Their answer: It would lead to increased deal activity, presumably because assets would be cheaper. Corporate America is sitting on an enormous cash pile.

Despite all the optimism, the survey found that 46% admitted that less than half of their deals garnered the return they expected. What’s more, dealmakers are leaning toward domestic transactions, due to political and trade instability. While the US and China have forged a truce in their trade war, other flashpoints remain, such as President Donald Trump’s talk about ratcheting up tariff pressure on European goods.

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Last year was the world’s fourth biggest on record for M&A, with global deal value hitting $3.8 trillion, according to Dealogic. Companies generated 12 deals worth more than $25 billion. The largest: United Technologies’ combining with defense contractor Raytheon, for $86 billion. Amid all the activity, Europe was an anomalous slow-go zone, with deal value down almost a third amid ebbing economic activity and unease about Britain’s exit from the European Union.

Among PE firms, Apollo Global Management saw its net income in last year’s fourth quarter almost double from the year-before period, hitting $188 million. Of course, the final quarter of 2018 was a particularly bad one for the stock market.

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