Three New York City pension funds face a lawsuit accusing them of breaching their fiduciary duties by divesting approximately $4 billion worth of assets from companies involved in fossil-fuel extraction.
The complaint alleges that the pension funds—the New York City Employees’ Retirement System, the Teachers’ Retirement System of the City of New York and the New York City Board of Education Retirement System—“breached their fiduciary duties and abused their control,” calling their fossil-fuel divestment policy a “misguided and ineffectual gesture to address climate change.”
The plaintiffs include conservative nonprofit Americans for Fair Treatment, as well as a subway train operator, a public school teacher, a school secretary and an occupational therapist in an elementary school.
The lawsuit centers on a decision by the pension funds’ boards of trustees in 2021 to divest an estimated $4 billion from securities related to fossil-fuel companies. At the time, the trustees and then-New York City Comptroller Scott Stringer said the decision followed “an extensive and thorough fiduciary process.” However, the complaint alleges the divestment was voted through “to advance environmental goals unrelated to the financial health of the plans.”
The complaint calls the divestment an “unlawful decision to elevate unrelated policy goals over the financial health of the plans” and claims it is inconsistent with the trustees’ fiduciary responsibilities.
The complaint alleges the trustee votes took place “in closed-door sessions and the vote tallies and the investment analyses, if any, on which the trustees relied were never made public.” It also accuses current NYC Comptroller Brad Lander of using his office “to advance an environmental agenda at the expense of retirement security.”
“While we don’t comment on pending litigation, we take our fiduciary duty very seriously,” a spokesperson for the NYC Comptroller’s Office said in an emailed statement. “The trustees of all three funds voted in 2021 to exclude fossil fuel reserve owners from their portfolios, in accordance with their fiduciary duty following a deliberative process that began in 2018, with the goal of protecting beneficiaries from the financial risks of investing in fossil fuel reserves.”
When the divestment was announced in 2021, the NYC Comptroller’s office said it expected the divestment to be completed within five years.
“We take this issue very seriously; pensions are a promise, and governments owe it to their employees to keep their commitment,” Elisabeth Messenger, CEO of Americans for Fair Treatment, said in a statement. “The teachers, maintenance workers, municipal employees, and more who keep our government running effectively deserve properly managed retirement systems, free from politically motivated intervention.”
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Tags: Americans for Fair Treatment, BERS, Brad Lander, Divestment, Fossil Fuels, Lawsuit, New York City Comptroller’s Office, New York City Employees’ Retirement System Teachers’ Retirement System Board of Education Retirement System, New York City Retirement Systems, NYCERS, TRS