New York City plans to divest roughly $5 billion in fossil fuels reserve holdings from its $189 billion pension system—the largest of any US municipality to date, city officials announced Wednesday.
In what the comptroller’s office is calling a “first-in-the-nation” step towards the five-year divestment goal, Mayor Bill de Blasio and Comptroller Scott Stringer will submit a joint resolution to pension fund trustees. The resolution will allow trustees to analyze strategies on responsibly divesting from fossil fuels in ways that meet fiduciary obligations.
“This is a first-in-the-nation step to protect our future and our planet—for this generation and the next. Safeguarding the retirement of our city’s police officers, teachers, firefighters, and city workers is our top priority, and we believe that their financial future is linked to the sustainability of the planet. Our announcement sends a message to the world that a brighter economy rests on being green,” Stringer said in a statement. “It’s complex, it will take time, and there are going to be many steps. But we’re breaking new ground, and we are committed to forging a path forward while remaining laser-focused on our role as fiduciaries to the systems and beneficiaries we serve.”
Once trustees from each of New York City’s five pension funds have been given an analysis of the proposed divestment, and the risk and return characteristics of the portfolio have been addressed by the Office of the City Comptroller’s Bureau of Asset Management (BAM), they will seek legal opinion regarding whether the divestment would comply with fiduciary duties to beneficiaries. If approved, the BAM will be given the go-ahead to complete the divestment through various steps and timelines. Due to the nature of the move, the Comptroller’s office suggests transactions would “likely be carried out in stages in order to reduce transaction and implementation costs.”
This coincides with Gov. Andrew Cuomo’s proposal last month, in which he called for the New York State Common Retirement Fund to cease future fossil fuel investments. In order to see his vision through, Cuomo also announced that he will also team up with Comptroller Thomas DiNapoli, who runs the fund, to form an advisory committee.
In addition, the Mayor also announced the city has filed a lawsuit against oil companies BP, Chevron, ConocoPhillips, Exxon Mobil, and Royal Dutch Shell, seeking damages to recoup billions of dollars which New York will spend to shield its inhabitants from the effects of climate change. The city has already begun to help its residents recover from past (Hurricane Sandy) and future climate change issues by implementing a $20 billion-plus resiliency program. Money regained will help fund the program.
“New York City is standing up for future generations by becoming the first major US city to divest our pension funds from fossil fuels,” de Blasio said in a statement. “At the same time, we’re bringing the fight against climate change straight to the fossil fuel companies that knew about its effects and intentionally misled the public to protect their profits. As climate change continues to worsen, it’s up to the fossil fuel companies whose greed put us in this position to shoulder the cost of making New York safer and more resilient.”