NYC comptroller proposes fossil fuel ban for new private market investments
Brad Lander, the comptroller for New York City, has put forward a proposal to cease new investments in mid- and downstream fossil fuel assets through private market vehicles.
The proposal builds on the System’s previous divestment stance. The three public pension funds—New York City Employees’ Retirement System (NYCERS), Teachers’ Retirement System (TRS), and Board of Education Retirement System (BERS)—committed in 2018 to divest from fossil fuel reserve owners in their listed equity holdings. Last year, they also voted to exclude upstream investments (exploration and extraction) from their private market holdings.
Lander’s new proposals would expand the System’s divestment to include future investments in midstream and downstream infrastructure, such as pipelines and LNG terminals. This comes as fossil fuel producers globally are ramping up their LNG capacities, with gas often branded as a "transition fuel" due to its relatively lower emissions compared to coal. However, the IEA warned in its latest Energy Outlook that markets could soon face an oversupply of LNG, and demand for the asset is expected to decline.
In his proposal, Lander highlights the financial materiality of the divestment decision: “Climate risk is financial risk, and we have a fiduciary duty to our beneficiaries to take that risk seriously as we make long-term investment decisions.”
“The impacts of the climate crisis are playing out in real time, with more frequent hurricanes, flash floods, intense heat waves, and deteriorating air quality jeopardising our planet and our portfolios. Excluding pipelines and LNG terminals from future investments will help mitigate the systemic risks that climate change poses to the global economy and to New York City’s public pension funds,” he added.
Lander’s proposals will be presented to the trustees of the three funds in early 2025, alongside a detailed impact assessment.
The move was welcomed by the Private Equity Stakeholder Project, a pressure group that campaigns for greater transparency in private markets. “With the trustees’ support, New York’s pension funds will become the first large US pension funds to commit to stop investing in climate-destroying infrastructure such as natural gas pipelines and LNG terminals,” said Alissa Jean Schafer, climate director for the project.
“Today, any fossil fuel investments ultimately introduce financial, legal, and climate risk for institutional investors," Schafer added. "Private equity firms are putting communities at risk, as well as the retirement funds of everyday Americans like firefighters and teachers.”
The Private Equity Stakeholder Project recently published a Climate Risk Scorecard, highlighting the significant role of private market firms in funding new fossil fuel projects.
LNG: essential transition fuel or dangerous misstep
Private equity's carbon footprint exceeds global aviation industry
