New York’s top financial stewards have praised the Securities and Exchange Commission’s proposed rule to require companies to disclose climate-related financial risk.
Both state Comptroller Thomas DiNapoli and city Comptroller Brad Lander lauded the
“The climate crisis poses a clear risk to our economy, financial markets, and portfolios,” Lander said in a statement. The "announcement by the Securities and Exchange Commission is a strong step forward to help investors like the New York City Retirement Systems assess financial risks posed to companies by climate change.”
Action by the federal government, he said, was needed and long overdue.
“For too long, disclosure of climate risk information by publicly traded companies has been voluntary and without uniform standards,” Lander said. “As a result, investors lack the information needed to evaluate the financial risks to their portfolios or potential investments posed by physical climate impacts like rising seas, floods, and wildfires, as well as policy impacts from companies and governments alike enacted to reduce emissions and exposure to climate threats.”
Lander is fiduciary for the city's five main pension funds, which are the New York City Employees' Retirement System (NYCERS); the Teachers' Retirement System of the City of New York (TRS); the New York City Police Pension Fund; the New York City Fire Department Pension Fund Subchapter Two; and the New York City Board of Education Retirement System (BERS).
As of January, the funds had $265.9 billion in assets under management and were the fourth largest public pension plan in the U.S.
Three of the five independent city pension funds, NYCERS, BERS and TRS, are divesting from securities related to
The city is one of the biggest issuers of municipal bonds in the nation. As of the first quarter of fiscal 2022, it had about $38.13 billion of general obligation bonds outstanding. That doesn’t include various agencies such as the Transitional Finance Authority or the Municipal Water Finance Authority, which have $42 billion and $31 billion of debt outstanding, respectively.
“As a fiduciary to over 750,000 pension beneficiaries, I have a duty to consider and address the climate risks of our investments as well as the broader systemic risks that climate change creates for the global economy, as we work to navigate the transition to a low carbon economy," Lander said.
DiNapoli also praised the proposal, saying it would allow for better investment decisions.
The SEC's move "will provide investors with the robust climate disclosures that we have long advocated for,” he said in a statement. “Access to consistent, comparable, and reliable information across the marketplace will greatly improve the state pension fund's ability to assess and address risks and opportunities as we navigate our path to net zero by 2040.”
DiNapoli is fiduciary for the state Common Retirement Fund, which is the third largest in the nation. As of Sept. 30, 2021, the state pension fund had assets of about $267.8 billion and was 99.3% funded.
The fund returned 33.5% in the latest fiscal year. Because of the fund’s strong performance employer contributions by state and local entities are being lowered, saving local governments about $1.5 billion in 2023, according to the state.
In 2019, DiNapoli released a plan to have the pension fund invest in sustainable companies, pursue climate solution investments and apply minimum standards to portfolio companies.
The fund has also divested from oil sands investments by firms which don't have climate-action plans and is continuing its divestment from coal producers.
“It is our responsibility as investors to make sure the companies we invest in are prepared for the future, so they can be profitable and successful in the global marketplace," DiNapoli said. "To do so requires us to have the information necessary to make informed investment decisions."
