New York City’s $170.6 billion pension system to analyze its carbon footprint
Climate risk remains high on the list of investor concerns, despite uncertainties about political commitment to action. In New York City, the Trustees of the $170.6 billion New York Pension Funds are taking action to address concerns about the investment risk from businesses that fail to adapt to climate change, and are to conduct the first-ever carbon footprint analysis of their portfolios.
As part of the initiative, New York City Pension Funds have selected two independent advisors to examine the associated short- and long-term investment risks around action on climate change.
“There’s no question climate change is transforming both our planet and the international economy. Every corner of the globe is feeling the economic, physical, and social impacts,” said New York City Comptroller Scott M. Stringer.
“This crisis isn’t going away – and we have to take decisive action. These advisors will help the Pension Funds continue to create long-term, sustainable growth for New York City’s retired firefighters, police officers, teachers, and other public employees,” he added.
The move to study the portfolios’ climate change exposure and conduct this first-ever carbon footprint analysis is the latest step in a series of other initiatives by NYC Pension Funds to address climate change risks. They include the Boardroom Accountability Project, which gives investors the ability to ensure boards are diverse and climate-competent.
Following a competitive selection process. the Funds have selected Mercer Investment Consulting LLC to determine how to incorporate the realities of global warming into the Funds’ asset allocation, manager selection, and risk management processes.
In addition, four of the Funds have selected Trucost plc, a U.K.-based business first set up in 2000 which provides carbon and environmental data and risk analysis, to perform a carbon footprint analysis of their public equity investments.
Last week S&P Dow Jones Indices (NYSE:SPGI), one of the world’s leading index providers, announced it had acquired a controlling stake in Trucost plc, effective Oct 1 2016, through its subsidiaryS&P Global Indices UK Limited.
“The demand for ESG data and indices is growing. This transaction strengthens the long-standing relationship between S&P Dow Jones Indices and Trucost, providing a strategic opportunity for us to create considerable value for sustainability-focused market participants,” said Alex Matturri, CEO of S&P Dow Jones Indices.
“The complementary nature of our two businesses allows us to combine Trucost’s industry leading environmental impact data and risk metrics with our global footprint and world-class benchmarking capabilities to develop new ESG solutions,” he added.
Mercer will be conducting the carbon footprint analysis for The Teachers Retirement System. This examination will measure the actual and estimated greenhouse gas emissions attributable to an investment portfolio and proportionally to its holdings.
Both firms are expected to complete their work by the end of 2017.
“New York City is a global leader when it comes to taking on climate change and reducing our carbon footprint. The selection of Mercer and Trucost will help our pension funds develop a long-term strategy to address the risks of climate change to our investment portfolios as well as to our City and our planet,” said Mayor Bill de Blasio.
Dina Medland is an independent writer, editor and commentator with a strong focus on issues around corporate governance, ethics, the workings of the boardroom and sustainable business. She is on the team of contributors to @ForbesEurope and is an ex-Financial Times staff member who has been a regular contributor in recent years. Further details about her background and a portfolio of work – including her commercially sponsored blog ‘Board Talk’ are available on her website http://www.dinamedland.com