The Newest Ally Against Climate Change: New York's Pension Fund

by | December 7, 2015

By Brian Nearing

The state pension fund is more than doubling investments in clean energy and sustainability, including a new $2 billion fund that will put more money behind green energy and less in companies responsible for large emissions of climate-changing greenhouse gases, Comptroller Tom DiNapoli said Friday.

The new low-emission index fund will be created by Jan. 1 and focus on investing in companies with reduced greenhouse gas emissions, rather than in companies with high emissions, like those in the coal mining industry, he said.

"Low-carbon, sustainable investments are key to our future. It's an approach that we can expand across all asset classes and help spur the kind of innovation and ideas that will assist in the transition to a low-carbon economy," said DiNapoli, who was taking part in an investors panel at the United Nations climate change talks in Paris.

The comptroller also is doubling the pension fund's existing $1.5 billion Sustainable Investment Program, which focuses on environmentally responsible companies, to $3 billion. The low-emission index was designed in partnership with Goldman Sachs Asset Management. Both programs are part of the $173.5 billion state workers' pension fund.

"As a long-term investor, we are very interested in strategies that manage risk, and there is no question that climate change is one of the biggest risks facing global investors across multiple sectors," said the pension fund's Chief Investment Officer Vicki Fuller. "By shifting our capital to companies with lower emissions and comparable returns, we are sending the message that our investment dollars will follow businesses with strong environmental practices."

The goal of the fund is to invest in climate-friendly companies while earning investment returns comparable to other index funds, which seek broad exposure through various sectors of the stock market, said Hugh Lawson, an official with Goldman Sachs.

The fund ranks companies' carbon footprints based on the not-for-profit London-based Carbon Disclosure Project. CDP helps more than 800 institutional investors with $95 trillion in assets understand climate-based risks in their investments.

"Companies take note when investors take action, and when money moves, the world moves too. We look forward to seeing the positive changes this will spur in future company actions," said Lance Pierce, president of CDP North America. "Forward-thinking pension funds like the New York's know that moving capital toward a low-carbon economy protects their beneficiaries' returns and is one of the fastest ways to address global warming."

(c)2015 the Times Union (Albany, N.Y.)