NYC Comptroller Lander Proposes Excluding Future Private Markets Investments in Midstream and Downstream Fossil Fuel Infrastructure by the...

NYC Comptroller Lander Proposes Excluding Future Private Markets Investments in Midstream and Downstream Fossil Fuel Infrastructure by the New York City Retirement Systems

New York, NY - Today, New York City Comptroller Brad Lander announced support for a policy that would cease future investments by New York City public pension funds in midstream and downstream fossil fuel infrastructure. The proposal builds upon the leadership taken previously by Comptroller Lander and the trustees of the New York City Employees' Retirement System (NYCERS), Teachers' Retirement System (TRS), and Board of Education Retirement System (BERS) to decarbonize the funds' holdings through strong action consistent with fiduciary duty to their beneficiaries.

The three pension funds previously divested from fossil fuel reserve owners in their public equities portfolio (passed by the boards in 2018, completed in 2022), and voted to exclude upstream fossil fuel investments (i.e. exploration and extraction) in their private markets investments in 2023. The policy Lander is proposing today would expand this exclusion to include a prohibition on future investments in midstream and downstream infrastructure (e.g. pipelines, LNG terminals) in their funds' private equity and infrastructure portfolios.

"Climate risk is financial risk, and we have a fiduciary duty to our beneficiaries to take that risk seriously as we make long-term investment decisions," said Comptroller Brad Lander. "The impacts of the climate crisis are playing out in real time, with more frequent hurricanes, flash floods, intense heat waves, and deteriorating air quality jeopardizing our planet and our portfolios. Excluding pipelines and LNG terminals from future investments will help mitigate the systemic risks that climate change poses to the global economy and to New York City's public pension funds."

These exclusions are part of the funds' broader Net Zero Implementation Plans, adopted in 2023, which include annual disclosure of Scope 1, 2, and 3 emissions; strategic engagement with portfolio companies and asset managers to reduce real-world emissions; and significantly scaling up the funds' investments in renewable energy and climate solutions. Under Comptroller Lander's leadership, the funds have:

• Completed their divestment from publicly traded fossil fuel reserve owners, making them the first sizable U.S. public pension system that has divested from both its active and passive publicly traded fossil fuel portfolio.

• Established an exclusion policy in upstream fossil fuels in private markets.

• Led shareholder campaigns that persuaded JP Morgan Chase, Citibank, and Royal Bank of Canada to disclose the ratio of their green vs. fossil fuel financing, with the goal of making this a sector-wide standard that supports the energy transition on a Paris-aligned timeline.

• Led shareholder engagement with utilities (a leading source of Scope 1 and 2 emissions in our portfolio) to decrease their carbon footprint in line with the Paris Accords.

• Adopted an ambitious net-zero plan, which includes expectations that all of the funds' public markets investment managers will have net-zero plans in place by 2025, and private market investment managers by 2026.

• Dramatically increased investments in renewable energy and climate solutions to over $11 billion.

• The New York City Employees' Retirement System (NYCERS) has joined the Net-Zero Asset Owner Alliance (NZAOA), a broader investor alliance for aligned climate action.

Staff of the Comptroller's Bureau of Asset Management will engage in research and development to craft the specific policy language and present it to the trustees of the three funds in early 2025, along with an assessment of its implications and impacts. Notwithstanding the funds' prior divestment actions, overall investments in energy and climate solutions have grown to over $11 billion, nearly three times the volume of the funds' holdings in fossil fuel reserve owners prior to 2021.

"The private equity sector has proven to be an important asset for institutional investors like the New York City pension funds. The industry nevertheless has chosen to remain the least transparent of any sector in institutional portfolios. Comptroller Lander has taken a big step to improve accountability on climate change and emissions. His action today starts a process to eliminate city funds going into downstream and midstream fossil fuels companies is a meaningful and prudent climate policy," said Tom Sanzillo, Director of Financial Analysis, Institute for Energy Economics and Financial Analysis. Tom is the former NYS state first deputy comptroller and worked for the city comptroller from 1990-1993. "Midstream and downstream companies along with the entirety of the fossil fuel industry remain a financial poor performer. In 1980, the company held 28% of the market, today it is 3.3%. Comptroller Lander's action today should provide him with much needed enhanced diligence to police an industry long in need of investor oversight. Fossil fuel companies, be they private or public equity performers, remain a sector in secular decline."

"The Sierra Club and New Yorkers are grateful to see Comptroller Lander and New York City pension trustees continuing to prioritize worker's long-term savings by taking action to mitigate the climate crisis and its economic impacts," said Loren Blackford, the Sierra Club's acting deputy executive director and a NYC resident. "This new policy would help address the growing role of private market investments in financing dirty fossil fuel projects and enabling major polluters that operate with little transparency. It is also another important milestone for the leadership of NYC's pension systems, which have been setting an ambitious and necessary example for other pensions across the country to follow to confront the systemic threat of climate change. With the impacts of climate change becoming ever-clearer, it's never been more urgent to stop financing the industries that drive the crisis, which threatens our economy and so many people's retirement security."

"The Wet'suwet'en Nation has been in a years-long struggle against a private-equity backed pipeline that runs through our home. Today's announcement from Comptroller Lander signals to Wall Street that one of the largest pension funds in the United States will no longer allow private equity to make new investments in midstream projects like the one that threatens our Nation," said Chief Na'Moks, Wet'suwet'en Hereditary Chief. "This policy is the beginning of the end of a dangerous status quo that allows the finance world free reign to invest in projects that destroy Indigenous land and harm all of us as we continue to face the consequences of investing in fossil fuels."

"We want to thank Comptroller Lander for making this extraordinary commitment to protect the NYC pension systems from opaque and risky holdings in private equity fossil fuel investments," said Dorian Fulvio, Organizer, 350NYC. "In keeping with the goal of Net Zero by 2040, this action is another big step in the process of reducing the pension portfolio's greenhouse gas emissions. Once again, New York City is leading the way, setting an example for the rest of the country, and the world. Today's announcement will curtail emissions, help curb future climate disasters, and prudently limit the pension portfolio's exposure to high-risk fossil fuel investments. Comptroller Lander is coupling ecological harm reduction with economic risk reduction, showing that prudent investing can also be good for the planet."

"Thanks to Comptroller Lander, New York City will once again lead the nation by ending new private equity investments into super-polluting projects like LNG ports and fracked gas pipelines," said Michael Johnson, a Sandy survivor and member of New York Communities for Change (NYCC). "Those investments heat the planet, causing the climate crisis, and are also rip-off investments for public pension funds. This is an historic moment for the city and the world."

"Financial institutions, including banks and insurance companies, have long been complicit in funding projects that perpetuate environmental racism, prioritizing profit over the health and well-being of frontline communities. Comptroller Lander's recent actions represent a crucial first step in holding these entities accountable, ensuring that the voices of those most affected are prioritized in the fight against environmental injustice," said Roishetta Ozane, The Vessel Project of Louisiana, Texas Campaign for the Environment, and Gulf South Fossil Finance Hub. "It's time to redirect our financial systems to support sustainable and equitable practices that truly benefit everyone."

"By making this announcement, Comptroller Lander is looking out both for the climate and pension beneficiaries," said Cassie Cain, Stand.earth Climate Finance Campaigner. "This is a groundbreaking move that opens the door to pension funds in New York State and beyond to follow suit. Just like when the Comptroller's office announced its intention to divest from publicly traded fossil fuel companies, we expect others to step up and take similar action. This is the power of New York City."

"Funding fossil fuels puts our planet and the security of our pensions at risk. Pulling out of mid and upstream investments in fossil fuel expansion is the responsible choice, and it's great to see Comptroller Lander leading on this," said Liat Olenick, public school teacher and organizer with Climate Families NYC.

"This is a huge win for climate justice and for our generation. With this move, Comptroller Lander is showing the world that it is possible, and even wise, to prioritize the future and cut ties with the fossil fuels that are threatening our health and livelihoods," said Lena Goings, high school student and youth organizer with Fridays For Future NYC. "It's time for truly fossil fuel free pension funds aligned with the need to combat the current worsening climate crisis and aligned with the call for a livable and just future."

"As banks retreat from funding risky fossil fuel projects - recognizing the financial and ecological risks of oil and gas infrastructure - private equity firms have filled the void, and invested hundreds of billions of dollars into dirty energy projects with little to no oversight," said Melanie Kruvelis, Senior Climate Finance Organizer at Strong Economy for All. "Today's announcement from Comptroller Lander tells private equity that institutional investors will no longer allow Wall Street to bet the retirement funds of New York City's public servants on harmful midstream and downstream projects with diminishing returns."

"Private equity investments in fossil fuels imperil the future of our planet, and have devastating effects on climate change. The Comptroller and the NYC pension funds are doing the right thing by drawing a hard line on private equity funds that continue funding fossil fuels. We cannot continue using money managers that are financing the destruction of the planet," said Jonathan Westin, Executive Director, Climate Defenders.

###

Public link

Please use the above public link if you want to share this noodl on another website.