New York Common Commits $1.3B to Sustainable Program

The $242.3 billion New York State Common Retirement Fund has committed $1.3 billion to two funds as part of its Sustainable Investments and Climate Solutions program. It also earmarked more than $600 million to alternative investments in February.

The pension program committed $1 billion to funds tracking the MSCI World ex USA Climate Change Index, which overweights companies expected to benefit from the transition to a low-carbon economy and underweights companies facing greater climate change risks. A company’s carbon intensity, climate risk management, potential stranded assets, physical risk exposure and development of climate solution products and services are the key factors assessing these rankings.

The NYSCRF also committed $300 million to the Carval Clean Energy Fund II as part of its sustainable investment program. The credit fund focuses on opportunities in clean energy, renewable energy, energy efficiency and energy storage with a focus on North America and Europe.

New York State Comptroller Thomas DiNapoli said the NYSCRF has so far invested more than $18 billion of the $20 billion target for its sustainable program, including investments in public equity, fixed income, private equity, infrastructure and real estate asset classes.

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“These investments will position the fund well for the future as the world transitions to a low-carbon economy,” DiNapoli said in a release. “These latest commitments will help us protect the fund’s long-term strength, transition its portfolio to net zero emissions by 2040, and position it for changes already happening in the markets.”

DiNapoli also announced the completion of the NYSCRF’s annual review of thermal coal and oil sands companies as part of its review of energy sector investments it expects will face significant climate risk. He said that, based on the reviews, the fund will continue to restrict investments in 22 previously restricted coal companies, and it will restrict six additional coal companies that have not demonstrated a readiness to transition to a low-carbon economy. The companies are Alliance Resource Partners, Geo Energy Resources, PT ABM Investama, PT Delta Dunia Makmur, PT Indonesia Asahan Aluminium (Persero) and Thungela Resources.

Additionally, of the nine oil sands producers the pension fund evaluated, DiNapoli said six failed to demonstrate transition readiness: Athabasca Oil, Canadian Natural Resources, Cenovus Energy, Husky Energy, Imperial Oil and MEG Energy. As a result, the fund said it will continue to restrict investment in those companies.

The restriction also means the fund will not directly purchase or directly hold debt or equity securities in those companies, nor will the fund invest in the companies through an actively managed account or vehicle. DiNapoli added that the investments in the restricted companies, which include approximately $19.9 million in thermal coal and $27.9 million in oil sands securities, will be sold “in a prudent manner and timeframe.”

In other February activity, the pension fund committed $300 million within its private equity portfolio to the Hudson River Co-Investment Fund IV, managed by Hamilton Lane. The fund will target middle-market companies in New York state, primarily in the healthcare, technology, transportation, business services and manufacturing sectors.

Another $300 million was committed within the NYSCRF real estate portfolio to the Cortland Enhanced Value Fund VI from Cortland Partners. The fund is a closed-end, commingled fund focusing on acquiring, developing and operating multifamily properties in the Southeast and Southwest U.S. The pension fund also committed more than $75 million to two real estate properties, which include approximately $70.6 million for a 240-unit multi-family apartment community in Phoenix and $4.7 million in a two-building affordable housing property in Cohoes, New York.

Finally, within the pension fund’s emerging manager program, which invests in newer, smaller and diverse firms, $15 million was allocated to the Empire GCM RE Anchor Fund, which will focus on creating and acquiring industrial outdoor storage in the Netherlands, Germany and Sweden.