Dovetailing on President Biden’s clean-energy initiatives shortly after taking office, two of New York City’s five pension funds voted to divest their portfolios of an estimated $4 billion from securities related to fossil fuel companies.
The New York City Employees’ Retirement System and New York City Teachers’ Retirement System voted to approve divestments on Monday and the New York City Board of Education Retirement System is expected to proceed on a divestment vote imminently, Mayor Bill de Blasio and city Comptroller Scott Stringer said in a joint statement.
NYCERS and Teachers were valued at $91.4 billion and $77.4 billion as of November, according to data from Stringer’s office. Overall, the five systems have roughly $240 billion in assets under management, constituting the fourth largest public pension plan in the U.S.
Immediately after his inauguration, Biden signed executive orders for the U.S. to rejoin the Paris Climate Agreement and halted the Keystone XL oil pipeline from Canada.
Biden also ordered agencies to reconsider methane emissions and fuel-efficiency standards while temporarily halting oil and gas leasing and drilling permits on federal lands.
“We would expect a permanent ban would get adjudicated in court, during which period states would have to get a judge to issue an injunction to allow for permitting to continue,” Cowen Equity Research said in a commentary. “The government could also establish a federal ban with waiver options on a state-by-state basis.”
In 2018, New York City became the nation’s first major city to commit to divesting major public pension funds from fossil fuel reserve companies. De Blasio and Stringer that year jointly announced a goal of doubling the pension funds' investments in climate measures to 2%, from 1% or about $4 billion within three years.
The city also partnered with the C40 Cities Climate Leadership Group and London to engage other cities to pursue fossil fuel divestment.
Securities were identified based on demonstrated risk from fossil fuel reserves and business activity, according to the statement, and the trustees will continue to evaluate risk in their portfolios to determine additional actions as warranted.
The names of companies and the final scope of the divestment will be released following the sale of all targeted securities. The mayor and comptroller expect the funds to complete the divestment within five years.
“Since we announced our first-in-the-nation divestment goal, the urgent environmental and financial risks of climate change have only grown more clear,” Stringer said.
These measures include renewable energy, climate infrastructure, green real estate and other investments that will help achieve the goals of the Paris accord.
“Divesting from fossil fuels and investing in climate solutions will accelerate our economic recovery by creating good-paying jobs in clean energy, resilient infrastructure, and environmental justice,” said Daniel Zarrilli, the city’s chief climate policy advisor.
