NYS Common allocates $800 million to climate-themed investments

Robert Steyer

Pension Investments Online

Feb 12, 2020

The New York State Common Retirement Fund, Albany, made $800 million in investments and commitments to fixed income and opportunistic alternative funds that emphasize strategies to address climate change risk and sustainable investing.

The transactions were announced Thursday by Thomas DiNapoli, the state comptroller and sole trustee of the $225.9 billion pension fund. "Climate change is one of the greatest risks facing investors, but the worldwide effort to address it has spurred innovation and change," Mr. DiNapoli said in a news release Thursday.

As part of a climate action plan announced in June, Mr. DiNapoli pledged to commit $20 billion "over the next decade." The pension fund already has allocated $8.5 billion, including the transactions announced Thursday.

The transactions, all of which closed in late January, are:

Avenue Sustainable Solutions Fund, an opportunistic alternatives commitment of $300 million to a private credit vehicle managed by Avenue Capital Management. It will focus on small and midcap companies in North America in sectors such as agriculture, water and recycling, according to a report posted on the comptroller's website. Avenue is an existing relationship for the pension fund.

The Nuveen Core Impact Bond Strategy, an investment of $250 million. Nuveen is the investment manager of TIAA-CREF. "Important themes in Nuveen's proprietary framework include affordable housing, community and economic development, renewable energy and climate change and natural resource conservation," the website said. Nuveen is a new relationship.

The Calvert Bond Fund, an investment of $250 million. The fund is managed by Calvert Research and Management, a subsidiary of Eaton Vance Management. Calvert 's investments include "sustainability solution areas ... including green bonds and social bonds," the website said. "Calvert has an active engagement program with ESG focus areas closely aligned with (our) corporate governance initiatives." Calvert is a new relationship for the New York pension fund.

The pension fund also announced two other commitments — both of which are new relationships with respective managers — made in January for its emerging managers program.

It made a $20 million commitment to Pennybacker Credit II, a real estate credit joint venture sponsored by Pennybacker Capital. The commitment is made through the Empire GCM RE Anchor Fund,. advised by GCM Grosvenor, an emerging manager program partner, the website said. This fund "will make investments in mezzanine debt and preferred equity investments secured by commercial real estate," the website said.

The pension fund also made a $15 million commitment to Fox RV Parking Fund I, a real estate equity joint venture with The Macritchie Group. This transaction was made through the Empire GCM RE Anchor Fund, advised by GCM Grosvenor, an emerging manager program partner. "The venture will make investments in niche storage strategies with a focus on developing and acquiring oversized vehicle storage facilities," the website said.