NYCERS reports sharp drop in emissions as it tightens scrutiny on manager alignment
The New York City Employees’ Retirement System (NYCERS) says it has made significant progress toward its net zero by 2040 target, it is now turning its attention to manager alignment as a key lever for further reductions
The $99bn pension fund—one of the five New York City Retirement Systems—reported a substantial reduction in portfolio-level emissions as part of its long-term decarbonisation strategy.
Over the past year, NYCERS reduced the Scope 1 and 2 carbon footprint of its portfolio by more than 18%, bringing emissions down 46% against its 2019 baseline, the fund said. However, it noted that it is currently holding back on Scope 3 reporting and has not met its Science Based Targets initiative (SBTi) alignment goal of having 70% of Scope 1 and 2 emissions covered by SBTi targets. It attributed this shortfall in part to the slow pace of climate disclosure adoption among investee companies.
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Acknowledging the scale of the net zero challenge, comptroller Mark Levine said cutting portfolio emissions at the current rate had been “no easy feat.”
“Federal policy and rhetoric pose numerous challenges for pension funds across the country, as legislators threaten to undermine efforts,” he added.
Manager alignment
Being part of the wider New York systems, manager alignment has emerged as a key focus in achieving its net zero ambitions. Former comptroller Brad Lander announced last year that public market managers have been asked to disclose their net zero commitments and science-based targets by mid-2025, with private market managers being expected to disclose their ambitions a year later.
At the end of last year, the fund said 43 of its 45 public market managers were aligned with its requirements. However, it raised concerns about PanAgora and BlackRock. NYCERS later reported that PanAgora had strengthened its approach, but said BlackRock remained misaligned. This prompted former comptroller Brad Lander to recommend that the system rebid BlackRock’s U.S. equity index mandates, which total $14.5bn. The fund’s trustees are now expected to decide on a potential overhaul of these mandates.
Climate solution commitments
NYCERS also disclosed that by mid-2025 it had committed $5.4bn in invested capital and unfunded commitments to climate solutions across asset classes, exceeding its interim target. Over the next decade, it plans to allocate $17bn to climate-related investments.
However, the fund said it intends to take a more cautious and refined approach to defining what qualifies as a climate solution, pledging to become “more intentional” in its framework.
Currently, NYCERS defines climate solutions based on companies’ green revenue share using MSCI’s Environmental Impact Metrics, with public equities and fixed income accounting for the bulk of its climate solutions exposure when measured by net asset value.
The fund now acknowledges that “the market has evolved” and says it will review peer asset owner approaches to climate solution investing, while focusing on investments that combine emissions reduction with strong risk-adjusted returns.
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