BlackRock bites back: manager accuses NYC comptroller of ‘politicising public pensions’

With a $42bn dollar equity mandate now in question, the world’s largest asset manager has accused the Office of the New York City Comptroller of politicising public pensions.

Earlier today, Brad Lander, outgoing comptroller of the New York City Pension Funds, which collectively manage close to $300bn in assets, recommended that three of the five funds terminate their listed equity mandates with BlackRock due to concerns over climate alignment.

Specifically, he called on TRS, NYCERS and BERS to divest their mandates from BlackRock’s US Equity R1000 Core, R2000 Growth and R2000 Value strategies. If approved by the pension funds’ trustee boards, this would result in a $42.3bn divestment.

In April, comptroller Lander invited all managers of listed market mandates to submit decarbonisation plans. BlackRock complied with this request, but Lander said that his office considered the response insufficient. He cited restrictions to proxy voting rights under the manager’s CDS policy and what he described as a restrictive approach to engagement with US listed companies.

BlackRock has now responded. In a letter sent to comptroller Lander and seen by Net Zero Investor, Armando Senra, managing director and head of the Americas for BlackRock’s institutional business said:“You accused BlackRock of abdicating its financial duty and putting New York City’s pensions at risk. These statements are another instance of the politicisation of public pension funds, which undermines the retirement security of hardworking New Yorkers.”

Senra stressed that BlackRock has held multiple conversations with the investment team in the Office of the New York City Comptroller and said that a version of BlackRock’s Climate and Decarbonisation Stewardship Programme would be made available to New York’s pension funds. He did not indicate whether this would involve any change to proxy voting rights, a concern raised by the comptroller.

The manager has faced criticism from both sides of the political spectrum in the US. In 2022, it was listed under a Texas law as a company to be boycotted over alleged divestments from fossil fuels. Last year, it was also the target of a Republican-led lawsuit that accused it of manipulating energy markets.

BlackRock has attempted to respond to both sides by offering different stewardship policies to different client types. The CDS Programme cited by Lander is seen as offering a relatively more ambitious approach on climate. However, the comptroller’s recommendation suggests that this may not be enough for some clients.

“BlackRock was founded in New York City and we are proud to call it our home. We look forward to continuing to serve NYC BAM and the city’s pensions as you pursue your next career opportunity”, Senra wrote in closing.