NYC Comptroller Vows to Stick With Climate Plan Amid Net Zero Exodus

New York City Comptroller Brad Lander said the three city pension funds with climate action plans “will not retreat one inch” from their policies, in spite of a flood of companies cutting back or eliminating their sustainable investing commitments.

“Climate risk is financial risk, and everyone can see it – in unprecedented wildfires, extreme flooding, and dangerously hot temperature,” Lander, who is trustee of the city’s $284.3 billion retirement system, said in a statement. “Others may walk back their climate commitments and cave to the current administration’s climate denialism, but we will not be cowed.”

The three pensions that have adopted Net Zero goals include the New York City Employees’ Retirement System (NYCERS), the Teachers’ Retirement System (TRS), and the Board of Education Retirement System (BERS). The city’s other two pension funds, the New York City Police Pension Fund and the New York City Fire Pension Fund do not have net zero implementation plans.

“They are the two boards that did not divest from publicly traded fossil fuel reserve owners as well so while they have investments in climate solutions, our net zero efforts are focused on the three systems,” a spokesperson for the New York City Comptroller’s office said.

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The three pension funds voted in 2021 to divest from publicly traded fossil fuel reserve owners after assessing that the move would increase their returns while avoiding unnecessary risk. The Comptroller’s office said the divestments, which were completed in 2022 and 2023, were the largest contributor to reducing in the portfolios’ Scopes 1 and 2 financed emissions.

According to the Comptroller’s Bureau of Asset Management, the highest emitting sectors within the entire system’s portfolios are materials, utilities, energy, and industrials assets. It also said it is looking to actively engage with their portfolio companies in those sectors.

Additionally, NYCERS and TRS have set their 2030 reduction targets for Scopes 1 and 2 financed emissions at 59% each, while BERS is aiming for a 49% reduction by the same time. Each fund is looking to eliminate the emissions completely by 2040.

In an update of the pension funds’ progress toward decarbonizing their portfolios, the Comptroller’s office said that between fiscal years 2023 and 2024, NYCERS, TRS, and BERS reduced their Scope 1 and 2 financed emissions intensity by 24.16%, 20.30%, and 21.9% respectively. And between 2019 and 2024 NYCERS, TRS and BERS reduced their Scopes 1 and 2 emissions in their public equity and corporate bonds portfolios by 34.57%, 39.51%, and 28.31% respectively. This is compared with the three pensions’ target reductions of 32%, 32%, and 22% respectively by 2025.

Lander, who is also a candidate for NYC mayor, argues that the reduced portfolio emissions along with the pension funds’ 10% return in fiscal 2024, which exceeded their actuarial target of 7%, shows that they can reduce the greenhouse gas emissions while also provided excess returns.