New York City Pension Funds Adopt Implementation Plan to Achieve Net Zero Investment Portfolio By 2040

New York, NY – New York City Comptroller Brad Lander, together with trustees of the New York City Employees’ Retirement System (NYCERS) and the Teachers Retirement System (TRS) announced implementation plans to reach their goal of net zero emissions in their investment portfolios by 2040.

New York City’s public pension funds are national leaders in mitigating climate risk in their portfolios. In 2015, NYCERS and TRS divested from thermal coal. From 2017 through 2022, the funds conducted comprehensive climate risk assessments, proceeded to divest from fossil fuel reserve owners, and doubled investments in climate solutions. In October 2021, the funds committed to reaching net zero by 2040 and set a robust goal of investing $36 billion in investments by 2035. Trustees directed the Comptroller— who serves as investment adviser, custodian, and a trustee of the funds— to develop an implementation plan to reach that goal across their portfolios.

Today’s NYCERS and TRS announcement represents one of the most comprehensive plans to date by a public pension fund to mitigate climate risk.

“Adopted by trustees today, the Net Zero Implementation Plans are a tangible, measurable roadmap toward decarbonization across our investment portfolio and the global economy,” said Comptroller Brad Lander. “NYCERS and TRS’ plans will prudently address climate risks and maximize opportunities to benefit New York City pensioners and beneficiaries, consistent with our fiduciary duty. This ‘high ambition’ plan is also a call for partnership with other pension funds, asset managers, financial firms, and portfolio companies. The climate crisis cannot be effectively addressed in silos.”

Climate change poses well-documented, systemic and material investment risks to the global economy. Meeting this challenge and prudently addressing the financial risk it poses to the pension fund assets will require a just transition to a low-carbon economy, and action by asset managers and portfolio companies.

The Net Zero Implementation Plans encompass four strategies that the pension funds will employ to prudently achieve net zero emissions:

1. Disclose emissions and set interim targets, including measurable goals and benchmarks across all investments and operations, specific interim emissions reduction targets by asset class, and disclosure of Scopes 1, 2, and 3 emissions. The plans specifically call for a public equity and corporate fixed income portfolio emissions reduction target of 32% for Scopes 1 and 2 by 2025, of 59% by 2030 for Scopes 1, 2 and 3, and of 100% by 2040.

2. Engage portfolio companies and asset managers to be net zero-aligned. The plans call for strengthening partnerships with other investors to collectively make change at the scale of individual companies, specific sectors, and the economy as a whole. For example, this year the pension funds brought shareholder resolutions at major banks to adopt absolute emissions targets, which would drive major reductions in bank lending for fossil fuel infrastructure projects, if enacted.

3. Invest in climate change solutions, such as renewable energy, energy efficiency, pollution prevention, and low-carbon buildings to reach the ultimate goal of $50 billion invested in climate solutions across all five NYC pension funds by 2035. NYCERS’ plan sets an interim target of $4 billion of climate solutions investment by the System by 2025, and $17 billion by 2035. TRS’ plan sets an interim target of $4.2 billion by 2025 and $19 billion by 2035.

4. Divest to reduce risk, building on the funds’ historic divestment of fossil fuel reserve owners in public equities by asking all private markets managers to exclude upstream fossil fuel investments. In addition, if thorough engagement proves to be futile with managers or companies whose core business undermines climate goals, the systems will consider excluding them, consistent with fiduciary duty.

In developing the plans, the Comptroller’s Office consulted a wide range of stakeholders, including the United Nations High-Level Expert Group on the Net Zero Emissions Commitments of Non-State Actors, the Paris-Aligned Investment Initiative, and the Net Zero Asset Owners Alliance. The Comptroller’s office intends to work with other “high-ambition” investors to align on disclosure, asset manager due-diligence standards, and shareholder engagement.

Given the prevalence of “greenwashing” by corporations and investors who announced net zero goals, but show no intention of actually reaching them as well as rollbacks in the face of myopic right-wing pushback against responsible fiduciary investing, the pension funds adopted a measurable and transparent plan that could serve as a model for other investors.

“If the cynical war of political distraction waged by red-state politicians at the behest of their fossil-fuel donors deters us, we will sacrifice our opportunity to maximize long-term investment returns along with millions of lives and trillions of dollars of global investment,” Lander said.

The vote to approve the implementation plan follows a robust and collaborative process between the Comptroller’s Office and trustees of NYCERS and TRS. As part of the plan, the Comptroller’s Office will publish an annual progress report, including status of interim emissions benchmarks, carbon footprint analysis, climate change solution investments, asset manager alignment, and corporate engagement.

The NYCERS Net Zero Implementation Plan is available here and the TRS plan is available here.

“By adopting these plans, NYCERS and TRS are showing what responsible investment looks like in the era of climate change.” said Bryan Berge, representative of Mayor Eric Adams, chair of the Board of Trustees of the New York City Employees’ Retirement System and a trustee of the Teachers’ Retirement System. “This plan will be a beacon for other institutional investors who share our vision for prudent portfolio decarbonization.”

“District Council 37 strongly supports NYCERS’ approval of actions to adopt the Implementation Plan to achieve Net Zero emissions in the NYCERS investment portfolio by 2040. I am proud to stand with my fellow Trustees and Comptroller Lander to commit to take actionable, science-based steps to address the global climate crisis.  Our vote today signals that NYCERS – and labor – will play a leading role, working with other stakeholders, to protect millions of lives, and the retirement livelihoods of our members,” said Henry Garrido, Executive Director, District Council 37 and NYCERS Trustee.

“For years, we have moved the New York City Employees’ Retirement System pension funds toward responsible investments that protect and strengthen both our retirees’ pensions and our planet’s climate,” said Public Advocate Jumaane Williams. “Adopting this Net Zero Implementation Plan is an essential step to ensure that movement continues on an urgent, effective, consistent timeline. Climate-forward investments are fiscally and environmentally responsible, and New York City continues to lead the way in divesting from harmful, risky industries like fossil fuels. I’m proud to support this effort through my Trustee Designee, and will continue to push for prudent, progressive investment strategies that weather any economic climate to support the long-term health of New Yorkers’ finances.”

“Every person, every community, and every institution have a responsibility to do their part in protecting our environment and safeguarding our futures,” said Brooklyn Borough President Antonio Reynoso. “This vote to achieve net zero emissions in the NYCERS investment portfolio by 2040 is yet another example of NYCERS leading the way on bold climate solutions. I’m proud that we are unified in this vision of a City that puts the health of our people and environment first. Thank you to City Comptroller Lander and the NYCERS trustees for championing this work to address our climate crisis across all levels of government.”

“We welcome the leadership of Comptroller Lander and New York City’s public pension funds. By considering and mitigating the real risks of climate change, this plan protects the retirements of hardworking Americans for decades to come. New York City has once again raised the bar for smart, transparent investment policies that put retirees first,” said Ben Jealous, executive director at the Sierra Club. “As the climate crisis continues, it poses real risks to people’s savings and the entire economy. We need more state and local financial officers to manage and mitigate the systemic risk of climate change to their investments and prevent corporate polluters and climate-denying politicians from putting their fossil-fuel agenda above the stability and prosperity of our futures.”

“Today’s announcement from New York City’s pension funds reflects a serious commitment to confronting the climate crisis. Achieving meaningful progress requires urgent action–not rhetoric and greenwashing. When we came together as a UN High-Level Expert Group to set strong standards for net zero emissions commitments, we put forward a set of recommendations for developing a serious net zero plan with integrity. The New York City pension funds are taking the lead by outlining a concrete and ambitious roadmap that should serve as a model for other pension systems interested in reaching their net zero goals, and I am hopeful that others will follow their leadership,” said Catherine McKenna, Chair of the UN’s High-Level Expert Group on the Net Zero Emissions Commitments of Non-State Entities.

“New York—a vulnerable city set just feet above the Atlantic—is leading the world in its financial response to climate change. It knows its fiscal health depends on a working planet, so it is showing others one of the key ways to make sure that working planet doesn’t break down,” said Bill McKibben, climate activist and founder of 350.org and Th!rdAct.

“Investors are at the crossroads of a growing set of climate risks and the ongoing need to finance the energy transition to end our reliance on fossil fuels. Thankfully, the New York City pension funds have been consistent pioneers in confronting our climate crisis and protecting the retirement income of New Yorkers at the same time,” said Daniel Zarrilli, former NYC Chief Climate Policy Advisor. “First by divesting from thermal coal and fossil fuel reserve owners, then investing billions in climate solutions like renewable energy and low-carbon buildings, and now committing to a measurable and transparent plan that will deliver a net zero investment portfolio by 2040, New York City continues to lead the way by demonstrating how to invest in a changing world while putting the retirement security of New Yorkers first. Congratulations to NYC Comptroller Lander for your leadership and to all of the NYCERS and TRS trustees for approving this thoughtful plan.”

In addition to Comptroller Lander, the trustees of NYCERS and TRS are as follows:

New York City Employees’ Retirement System (NYCERS): Mayor Eric Adams’ Appointee Bryan Berge, Director, Mayor’s Office of Pension and Investments; New York City Public Advocate Jumaane Williams; Borough Presidents: Mark Levine (Manhattan), Antonio Reynoso (Brooklyn), Vito Fossella (Staten Island), and Vanessa L. Gibson (Bronx); Henry Garrido, Executive Director, District Council 37, AFSCME; Richard Davis, President Transport Workers Union Local 100; and Gregory Floyd, President, International Brotherhood of Teamsters, Local 237.

Teachers’ Retirement System (TRS): Mayor Eric Adams’ Appointee Bryan Berge, Director, Mayor’s Office of Pension and Investments; Chancellor’s Representative, Dr. Angela Green, New York City Department of Education Panel for Educational Policy; and Thomas Brown (Chair), Victoria Lee, and David Kazansky, all of the United Federation of Teachers.

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