NYS Office of the Comptroller - New York State Pension Fund Sets 2040 Net Zero Carbon Emissions Target

 

Announcement Builds on Fund’s Climate Action Plan

Review Of Energy Sector Investments To Be Completed By 2025, With Potential Divestment For Riskiest Companies

Sponsors of Fossil Fuel Divestment Act Support Fund’s Strategy

 New York State Comptroller Thomas P. DiNapoli announced today that the New York State Common Retirement Fund (Fund), valued at an estimated $226 billion, has adopted a goal to transition its portfolio to net zero greenhouse gas emissions by 2040. This process will include completion within four years of a review of investments in energy sector companies, using minimum standards to assess transition readiness and climate-related investment risk, with, where consistent with fiduciary duty, divestment of companies that fail to meet minimum standards.

On the eve of the 5th anniversary of the Paris Agreement, as the world increasingly moves toward net zero emissions targets by or before 2050, this goal will continue to ensure the Fund’s portfolio is adapting to the anticipated transition. This ambitious and multifaceted effort continues State Comptroller DiNapoli’s leadership on management of climate risk to investments, for which the Fund is already top-ranked in the United States by the Asset Owners Disclosure Project.

“New York State’s pension fund is at the leading edge of investors addressing climate risk, because investing for the low-carbon future is essential to protect the fund’s long-term value,” State Comptroller DiNapoli said. “Achieving net-zero carbon emissions by 2040 will put the Fund in a strong position for the future mapped out in the Paris Agreement. We continue to assess energy sector companies in our portfolio for their future ability to provide investment returns in light of the global consensus on climate change. Those that fail to meet our minimum standards may be removed from our portfolio. Divestment is a last resort, but it is an investment tool we can apply to companies that consistently put our investment’s long-term value at risk. I am grateful for Senator Liz Krueger’s focus on addressing climate risk, her recognition of our work, and her appreciation of the importance of the State Comptroller’s independent, fiduciary duty and constitutional authority as trustee of the Fund for the benefit of our members, retirees and beneficiaries. My thanks as well to Assemblymember Felix Ortiz for his efforts on this issue.”

Building on DiNapoli’s 2019 Climate Action Plan, the Fund will continue its use of minimum standards for determining whether a company is well-prepared for the transition to a low-carbon global economy. The Fund has already set minimum standards for the thermal coal mining industry and divested from 22 coal companies.

The Fund is currently wrapping up its evaluation of nine oil sands companies, and will develop minimum standards for investments in shale oil and gas. Those will be followed by; integrated oil and gas; other oil and gas exploration and production; oil and gas equipment and services; and oil and gas storage and transportation. Minimum standards for all of these sectors, and a determination of which companies are suitable to remain in the Fund’s portfolio, will be completed by 2025. After completing initial reviews, the Fund will continue to reassess whether the remaining companies are meeting minimum standards and are on viable low-carbon transition pathways. The Fund will be hiring additional staff and engaging consulting partners to support these critical efforts.