New York Comptroller Aims to Double Pension Plan’s ESG Funding

DiNapoli seeks to increase the state Common Retirement Fund’s sustainable investments to $20 billion.

New York State Comptroller Thomas P. DiNapoli pledges to double the New York State Common Retirement Fund’s sustainable investments.

That will bring the pension program’s environmental, social, and governance (ESG)investments to $20 billion over the next decade.

To aid in that effort, he will next create a multi-asset climate solutions program, which will operate similarly to its emerging manager program. It will work with managers, consultants, and index providers on creating alignment with the fund’s sustainability goals.

The fund intends to better assess its exposure to climate-heavy risk sectors recommended by the Task Force on Climate-related Financial Disclosures. These include energy and utilities, transportation, materials and buildings, agriculture, food and forest products, and financials.

Also, the fund will also create new evaluation tools, hire ESG-centric staff, and help managers, data and index providers, and consultants in meeting asset class-specific metrics and its own standards for companies in each high-risk sector, starting with thermal coal.

“The Fund has taken many steps to assess and address climate risk already, but clearly more must be done and done quickly,” he said. “This is a proactive plan to mitigate climate risk, capitalize on opportunities in the growing low-carbon economy and protect the fund’s long-term value.”

His new initiative allows the fund to divest from companies that fail to meet minimum standards set by the $210.2 billion pension plan. The strategy, which piggyback the Decarbonization Advisory Panel’s April findings, will now also seek to eliminate thermal coal and other sectors with climate-related issues where it has invested.

The panel was created by DiNaopli and Gov. Andrew Cuomo.

In addition, DiNapoli will establish a “watch list” of managers not hip to the fund’s ESG policy. New York Common will also develop eco-friendly strategies for businesses it is vested in that do not incorporate the best sustainability practices.

“The Panel delivered its ambitious recommendations in early April 2019, and in response, I directed staff to build on the Fund’s existing work by formulating this bold Climate Action Plan to put the CRF on the path to achieving a sustainable portfolio,” wrote DiNapoli in the strategy’s outline, which he said is the Common Retirement Fund’s “next level of climate-related assessment, investment, engagement and advocacy work.”

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