NYC Pensions Seek Divestment Plan Guidance

Pension funds are looking for expert advice on how to extract fossil fuels from portfolios.

Three New York City retirement systems have issued a request for information seeking input and recommendations on how best to create a strategy to divest from fossil fuel companies within five years.

In January, the New York City Employees’ Retirement System (NYCERS), the Teachers Retirement System (TRS), and the Board of Education Retirement System (BERS), which together represent 70% of the city’s $193 billion in pension fund assets, passed a joint resolution to begin evaluating ways to divest from fossil fuel-related investments.

The New York City Retirement System also recently launched a comprehensive fossil fuel study on whether divesting from fossil fuel stocks is economically feasible from an investment returns viewpoint. 

The request for information, issued this past week, will collect advice, information, and analysis from experts whose insights will be used to develop a request for proposal for services to determine the best way to divest and exclude securities issued by companies owning fossil fuel reserves from the pensions’ investment portfolio.

“We believe that a green economy is a thriving economy,” New York City Comptroller Scott Stringer said in a release. The request for information “reflects our commitment to growing our funds for pension fund beneficiaries and protecting our planet.”

Experts sought for advice include those with backgrounds in investment, finance, legal, scientific, and environmental policy, with responses due on June 1. Those who respond to the request for information may be selected to make oral presentations to the trustees and staff. After New York City Mayor Bill de Blasio and the city’s bureau of asset management review the responses, the bureau will develop and issue the request for proposal.

In the request for information, the systems said they will use an investment consultant to provide analysis, evaluation, and advice on investment risks posed by fossil fuel reserve owners; determine the impact of potential approaches to divestment on the risk, return and diversification of the systems’ portfolios; and develop a strategy and timetable for divesting.

Any divestment approach must fulfill the investment policies and objectives of the systems, and comply with fiduciary duty. The boards will also seek legal opinions to determine whether any proposed divestment plan and actions would comply with the fiduciary duty to beneficiaries.

The request for information is only for informational purposes, and is not a solicitation for the award of a contract. Additionally, a response to the request for information is not required in order to respond to a request for proposal.

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