N.Y. pension fund one of world's most responsible
Jul 12, 2020
There have been some calls lately for the New York state pension fund to divest from fossil fuel companies. They imply New York is a laggard in dealing with climate issues. As legendary radio broadcaster Paul Harvey would say: "Now for the rest of the story."
New York's pension fund is recognized by independent observers as a leader among investors in responsibly addressing the risks and opportunities presented by climate change. The Asset Owners Disclosure Project ranks New York as number 1 nationally and number 3 globally among public pension funds that incorporate climate risk in investment decisions.
Greenhouse gas emissions and global warming are real threats to our planet and a risk to investors. That's why New York was the first state pension plan in the United States to develop and implement a comprehensive Climate Action Plan to respond to this challenge. The plan follows the recommendations of the Decarbonization Advisory Panel that was convened by Gov. Andrew Cuomo and myself. After spending a year examining research and consulting with industry and investment experts, this panel recommended a multi-faceted approach inspired by the goals of the Paris Agreement, rather than a sole focus on divestment.
The Climate Action Plan uses a range of strategies: identification and assessment of risks and opportunities, investment and divestment of assets, and engagement and advocacy with companies, regulators and government policy makers.
Pursuant to our plan, I have doubled our commitment to sustainable investments to $20 billion with an emphasis on climate solutions. I have appointed New York's first-ever director of Sustainable Investments and Climate Solutions, an investment professional with extensive experience in the area, who has already shepherded more than a $1 billion in sustainable investments in his first six months on the job.
The plan also calls for the development of enhanced climate risk assessments for sectors that are at high risk from climate change. We use these standards to determine if companies are climate-resilient and prepared for the transition to a low-carbon economy. After a thorough assessment, the Fund has divested from 22 thermal coal mining companies that are not prepared to thrive, or even survive, in the low-carbon economy. We are currently evaluating the low-carbon transition readiness of oil sands extraction companies, and we will follow that with assessments of other industries that are at high risk from climate change, including other companies in the energy, utility and transportation sectors.
As trustee of the state pension fund, I have the fiduciary responsibility to protect the investment strategies that fund the lion's share of over $1 billion in monthly pension payments to New York's state and local public retirees who depend upon their well-earned pensions. I am also mindful of the taxpayers who help pay for these benefits. Investment decisions must not be based on slogans or political agendas. To have the state Legislature micromanage the investments of the state pension fund would be a dangerous step that would threaten the independence of the comptroller's office to make investment decisions solely in the interest of retirees, current and future.
I am committed to keeping the New York plan one of the best-funded retirement systems in the nation and also one of the most responsible investors in the world.