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Powerful New York City public pension funds are prepared to drop asset managers that do not comply with its climate plans, comptroller Brad Lander warned, in a move that puts industry groups such as BlackRock under renewed pressure over sustainable investing.
Lander, who is running for New York City mayor, put asset managers on notice on Tuesday that he would demand credible transition plans aligned with the city’s goal to reach net zero emissions by 2040.
Lander said: “Asset managers like BlackRock have forsaken even the symbolic forms of climate action they have taken, such as joining the net zero asset managers group which BlackRock left in January.”
The New York City comptroller acts as custodian and trustee for five major retirement funds collectively managing about $284bn. BlackRock presently manages about $16.8bn for NYC Employees’ Retirement System (Nycers), according to Lander’s office, down from $19bn last year after asset sales and market-related movements.
Nycers joined the UN-aligned climate action group for long-term investors, the Net Zero Asset Owner Alliance, following BlackRock’s exit. Pension funds, which have a time horizon that lasts decades because of the need to payout retirees, have found themselves at odds with fund managers facing shorter-term political and legal pressures over climate action.
Managers that failed to provide actionable plans on emissions by a June 30 deadline may lead to Nycers putting its investment mandates out to bid, Lander said, opening the door for rivals to win the business.
Nycers, the Teachers’ Retirement System and the Board of Education Retirement System are among the pension schemes expected to support the measure.
The comptroller said asset managers’ credentials would be evaluated based on disclosures of emissions from throughout the supply chain — including scope 3 emissions, a broader measure that includes emissions from business with third parties.
Managers are also expected to be judged according to their broader investment portfolios, beyond the money they manage for New York City’s retirement funds.
Pete Sikora, climate campaigns director at New York Communities for Change, said: “Forces like [Tesla chief executive] Elon Musk, [conservative activist] Leonard Leo, and oil and gas companies created and funded a campaign to demonise [environmental, social and governance issues] and push firms like BlackRock to stop engaging in very modest pro-climate policies.”
“Unfortunately, the intimidation campaign was successful,” Sikora said, prompting some pension schemes in Republican-majority states to pull funds from BlackRock. He welcomed Lander’s move as a sign that New York City’s public pensions were prepared to leverage their assets too.
It is not the first time the comptroller has attempted to press US banks and asset managers over climate-related issues, and New York has led the way among major cities by putting in place a fossil fuel divestment policy which it has successfully defended from court action.
Last year it was unsuccessful in seeking to block the election of Saudi Aramco chief executive Amin Nasser to the board of BlackRock, on the grounds that his role leading the oil and gas producer was “incompatible” with climate action and the asset manager’s commitments.
Coming against the backdrop of a rollback of climate targets under Donald Trump’s administration after cuts to federal agencies, New York City has tried to hold its ground.
Last year, Nycers reached an agreement with JPMorgan, Citi and the Royal Bank of Canada to disclose their ratio of clean energy financing to fossil fuel energy financing, and the fund has flagged its intention to push for further climate action at the shareholder meetings of banks this year.
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