New York City's pension funds are conducting the first-ever carbon footprint analysis of their investment portfolios to determine how to best manage them in relation to climate change, the pension trustees announced on Thursday.
"In the 21st century, companies must transition to a low-carbon economy, and a failure to adapt to the realities of global warming could present potential investment risks," the trustees said in a statement. "As part of the initiative, the funds have selected two independent advisors to examine the associated short- and long-term investment risks."
The move is the latest in a series of initiatives by the funds to address climate change risks, including the "Boardroom Accountability Project," which gives investors the ability to ensure corporate board of directors are diverse and climate-competent.
"There's no question climate change is transforming both our planet and the international economy. Every corner of the globe is feeling the economic, physical, and social impacts," New York City Comptroller Scott Stringer said. "This crisis isn't going away – and we have to take decisive action. These advisors will help the pension funds continue to create long-term, sustainable growth for New York City's retired firefighters, police officers, teachers, and other public employees."
The city's five main pension funds 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 Subchapter 2; New York City Fire Department Pension Fund Subchapter Two; and the New York City Board of Education Retirement System (BERS).
The funds have selected Mercer Investment Consulting to determine how to incorporate the realities of global warming into the funds' asset allocation, manager selection, and risk management processes. Also, four of the funds have picked Trucost to perform a carbon footprint analysis of their public equity investments while TRS picked Mercer to do it. This study will measure actual and estimated greenhouse gas emissions attributable to an investment portfolio and proportionally to its holdings.
The funds picked these firms in a competitive selection process. The firms' work is expected to be wrapped up by the end of the year.
"New York City is a global leader when it comes to taking on climate change and reducing our carbon footprint," said Mayor Bill de Blasio. "The selection of Mercer and Trucost will help our pension funds develop a long-term strategy to address the risks of climate change to our investment portfolios as well as to our city and our planet."
