The office of the New York City comptroller has dropped a recommendation to divest from quant manager PanAgora, following sustained engagement on climate stewardship.
Outgoing comptroller Brad Lander said during the funds’ Pension Investment Committee meeting that he would no longer recommend divesting $358mn from a US small-cap equities strategy managed by PanAgora.
Last month, Lander, who oversees the $294.6bn New York City Retirement Systems covering five public pension funds, recommended divesting from three asset managers over insufficient alignment with the funds’ climate requirements.
If approved by the trustee boards, the proposals could result in a $42bn divestment from BlackRock, alongside potential divestments of $384mn from Fidelity and $358mn from PanAgora.
Lander has previously said he expected all third-party managers running listed market strategies to comply with the funds’ climate reporting and engagement requirements. Speaking in November, he flagged that BlackRock, Fidelity and PanAgora had failed to meet those standards.
As a quantitative manager, PanAgora has said it does not generally form views on, or engage with, individual companies. Lander had pointed out that this approach meant the firm invested in companies that did not disclose emissions data.
The proposals were due to be discussed during a closed session of the Investment Committee meeting. However, in his opening remarks, Lander said engagement with PanAgora had since been constructive, with the firm agreeing to meet the comptroller’s expectations on engagement around carbon reporting.
“PanAgora has actually reached back out to us and made the changes that we were asking for them,” Lander said.
“So in executive session, I will not be asking you to end our engagement with PanAgora.”
PanAgora has been approached for comment but was not immediately available.
Lander added that he had not received similar reassurances from BlackRock or Fidelity, indicating that potential divestments from those managers remain under consideration. While the proposals were discussed at the meeting, a final decision is expected to be deferred until the new year, Net Zero Investor understands.
Lander is set to leave office in the new year as he prepares to run for the US Congress. He will be replaced by Mark Levine, who won the election for comptroller in a landslide victory in November.
