NYC Comptroller pledges to exclude private equity-funded fossil fuel infrastructure from public pension investments
New York’s commitment sets a powerful example for other institutional investors to ensure private markets transition away from fossil fuels
October 22, 2024
The Private Equity Stakeholder Project praised the comptroller who oversees $285 billion in investments by New York City’s public pension funds for committing to cease future investments in midstream and downstream fossil fuel infrastructure
New York City Comptroller Brad Lander announced this morning that he will ask the trustees of three of the city’s pension funds – NYCERS, NYCTRS, and NYCBERS – to prohibit future investments in private equity-funded midstream and downstream fossil fuel companies and projects. The pension funds had already divested from publicly traded fossil fuel stocks and excluded privately funded upstream oil, gas, and coal.
“With the trustees’ support, New York’s pension funds will become the first large U.S. pension funds to commit to stop investing in climate-destroying infrastructure such as natural gas pipelines and LNG terminals,” said Alissa Jean Schafer, Climate Director for the Private Equity Stakeholder Project.
“We applaud New York City for its leadership in the energy transition, which has added urgency since the city has a front-row seat for climate change impacts such as coastal flooding and heat waves,” Schafer said.
“Today, any fossil fuel investments ultimately introduce financial, legal, and climate risk for institutional investors,” Schafer added, “Private equity firms are putting communities at risk, as well as the retirement funds of everyday Americans like firefighters and teachers.
“Investors need to make sure private equity isn’t tying up communities’ retirement funds in risky and harmful fossil fuel industries. Instead investors can and should implement policies that shift investments into more sustainable and less risky sources of energy, like we are seeing proposed in New York today.”
“Private equity firms must respond to the sources of their capital, and this sets a precedent for other major pension funds and institutional investors across the nation to follow suit,” she said.
New York City’s pensions have already been leading on climate with a pledge to reach net zero by 2040, with specific provisions to ensure an energy transition in private equity in the groundbreaking Net Zero Implementation Plan.
Lander said in a press conference that New York’s pension funds already have invested $11 billion in renewable energy and other climate solutions, and will step that up with the goal of reaching $50 billion as part of a strategy to confront systemic climate risk and to “help us grow our pension fund holdings and secure a thriving renewable future for New York City and the planet we live on.”
The Private Equity Climate Risks Scorecard, released Oct. 1, revealed how 21 private equity firms continue to make fossil fuel investments that produce over a billion tons of fossil fuel emissions, more than global aviation. The Scorecard highlights the disparity between the public images of these firms, which often claim to support climate action, and the reality of their continued investment in fossil fuels.
“Private equity firms are exempt from most financial disclosures, meaning the billions of dollars they invest in harmful fossil fuels are largely hidden from the public,” Schafer said. “But the damage to the planet, the environmental injustice and the financial risks are borne by all of us, requiring immediate and decisive action by asset owners and asset managers.”
