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Powerful New York City public pension funds are prepared to drop asset managers that do not comply with its climate plans, its comptroller Brad Lander will warn today, in a move that could put industry giants such as BlackRock under renewed pressure over sustainable investing.
Lander, who is running for New York City mayor, aims to put asset managers on notice that he will demand credible transition plans aligned with its goal to reach net zero by 2040.
The New York City comptroller acts as custodian and trustee for five major retirement funds collectively managing about $284bn. BlackRock manages about $19bn for NYC Employees’ Retirement System (Nycers), according to Lander’s office.
Managers that fail to provide actionable plans on emissions may be asked to re-pitch for the mandate to manage the funds, he is expected to say, opening the door for rivals to win the business.
Nycers, the Teachers’ Retirement System and the Board of Education Retirement System are among the pension schemes expected to support the measure. They could seek to re-bid contracts for asset managers that do not comply as soon as this summer, one person familiar with the discussions said.
The comptroller is expected to evaluate asset managers’ credentials based on disclosures of emissions from throughout the supply chain — including scope 3 emissions, a broader measure that includes emissions from business with third parties.
Managers are also expected to be judged according to their broader investment portfolios, beyond the money they manage for New York City’s retirement funds.
It is not the first time the comptroller has put pressure on US banks and asset managers such as BlackRock over climate-related issues, and has led the way among major cities putting in place a fossil fuel divestment policy.
Last year it was unsuccessful in seeking to block the election of Saudi Aramco chief executive Amin Nasser to the board of BlackRock, on the grounds that his role leading the oil and gas producer was “incompatible” with climate action and BlackRock’s own commitments.
Coming against the backdrop of a rollback of climate targets under the Trump administration after cuts to a swath of federal agencies, New York City has tried to hold its ground.
Last year, Nycers reached an agreement with JPMorgan, Citi and the Royal Bank of Canada to disclose their ratio of clean energy financing to fossil fuel energy financing, and has flagged its intention to push for further climate action at the shareholder meetings of banks this year.