NY Common Retirement Fund Implements Climate Protection Measures

The New York State Common Retirement Fund (Fund) will enact investment restrictions on eight integrated oil and gas companies, including Exxon Mobil Corp., following a review of their readiness to transition to a low-carbon economy, announced State Comptroller Thomas P. DiNapoli, who serves as trustee of the Fund. This evaluation is part of a broader assessment of the energy sector's exposure to climate risk undertaken by DiNapoli.

In response to the assessment's findings, the Fund will divest its corporate bonds and actively managed public equity holdings in the identified integrated oil and gas companies that are deemed unprepared for transition. Alongside Exxon, the companies set to undergo divestment and restriction in the coming months include Guanghui Energy Company Ltd., Echo Energy PLC, IOG PLC, Oil and Natural Gas Corporation Ltd, Delek Group Ltd., Dana Gas Co, and Unit Corp. The total value of these holdings stands at approximately $26.8 million as of December 31, 2023.

Additionally, DiNapoli revealed that the Fund has successfully committed $20 billion to its Sustainable Investments and Climate Solutions program, achieving its initial goal. Moving forward, the Fund aims to double its commitment to the program by 2035, aiming to invest $40 billion. This program targets sustainable investments such as clean energy generation, energy storage, resource efficiency, and green infrastructure across all asset classes. As part of the program's expansion, the Fund plans to increase its investments in climate indexes by 50% over the next two years, with a long-term objective of doubling them by 2035.

“The New York State Common Retirement Fund is a recognized leader in addressing climate-related investment risks and pursuing opportunities in the growing low-carbon economy,” DiNapoli said. “Climate change is an increasingly urgent risk facing all investors, and I am determined to protect the state’s pension fund by keeping it at the forefront of efforts to mitigate risks to our investments. This reduces our fund’s exposure to fossil fuels. Consistent with my fiduciary duty to maximize investment returns for the benefit of our members and retirees, these actions should help accomplish the goals of our Climate Action Plan.”

DiNapoli's Climate Action Plan, unveiled today, aims to address investment risks linked to climate change and steer the Fund's portfolio towards achieving net-zero greenhouse gas emissions by 2040. The plan encompasses a thorough review process targeting various sectors, with the initial focus placed on energy companies. As of 2023, the Fund has scrutinized shale oil and gas, oil sands, and coal companies, leading to investment restrictions on 50 firms deemed lacking in transition readiness. Among these are six newly identified coal companies and four additional shale oil and gas companies.

Having concluded the assessment of energy companies, the Fund is now poised to extend its review to other sectors identified by the Taskforce on Climate Financial Disclosure as high-impact areas. The next phase will specifically target major utilities in the United States, recognized as significant greenhouse gas emitters but also potential pioneers in developing climate solutions. This strategic approach aligns with the Fund's commitment to proactively address climate-related risks while seeking opportunities for sustainable investment.

In alignment with the Climate Action Plan's objectives, DiNapoli also unveiled additional measures. The Fund will refrain from initiating new private market investments in funds focused on oil, gas, and coal extraction or production. Furthermore, modifications to proxy voting guidelines are planned to advocate for enhanced climate disclosure from public companies, urging them to provide comprehensive insight into their climate transition plans, associated risks, and potential opportunities.

Source: OSC New York