New York State

The empire state – creating impact from investment

From 2005 to 2012, greenhouse gas (GHG) emissions in New York State fell by more than 18 percent, even as the state’s economy grew by more than 10 percent. [1]  Today, on a list of state rankings, New York is third largest by gross domestic product [2], fourth largest by population [3]—but only the ninth largest by GHG emissions. [4]

That’s an impressive feat. State leaders are responding to worrying trends and taking climate change seriously. For them, the evidence is impossible to ignore: summer heat waves are more intense [5], sea levels along New York's ocean coast are approximately a foot higher than in 1900 [6], and intense precipitation events are occurring more often. [7]

When Hurricane Sandy barreled into the Eastern seaboard in October 2012, it left parts of New York in ruins and caused $19 billion worth of damage in New York City alone. [8]  This “superstorm” wasn’t exactly a wake-up call because state and New York City officials were already working to combat climate change.  But it did reinforce the need to keep taking stronger measures to mitigate the economic and planetary cost of climate change, which is linked to more extreme weather events. [9][10][11]

Paying attention to the pension fund portfolio

The New York State Common Retirement Fund’s (CRF) investment philosophy and strategies complement the state’s climate change strategy.  With nearly $185 billion in net assets, the CRF is the third largest public pension fund in the United States [12] and one of the largest institutional investors in the world. [13]

New York State Comptroller Thomas P. DiNapoli is the Trustee of the fund. [14]  DiNapoli has advocated policies such as carbon pricing and alternative fuel support because he believes that the long-term health of the economy and the sustainability of CRF investments depend on addressing the financial risks posed by climate change. [15]  He has a history of fighting misuse and inefficiency in public funds [16] and has also been vocal about climate change and its effect on the economy and investment matters. [17]

DiNapoli sees environmental sustainability and economic sustainability as two sides of the same coin [18] and when it comes to pensions, he has the facts to back him up.  There is a strong body of academic research and investor experience that show investing in sustainability-focused businesses is a formula for success. [19]

For that reason, the comptroller established the Green Strategic Investment Program to actively invest in clean technology companies and committed to invest $500 million into the program from 2008 to 2011. The CRF has also invested in World Bank Green Bonds, Hudson Clean Energy Partners and Generations Sustainability Fund.

In the coming months the CRF will continue demonstrating its market leadership by making a groundbreaking announcement concerning a multi-billion-dollar allocation to a risk-aware, low emissions equity strategy.

More than a shareholder; a change agent

DiNapoli and his office don’t stop at simply investing in sustainable companies.  Through corporate governance initiatives, the CRF encourages portfolio companies to adopt sustainable management practices. [20]

In addition, the comptroller leverages the CRF’s position as a key shareholder to influence companies to implement actions that reduce environmental risk. DiNapoli has filed many shareholder resolutions during his time in office to achieve this.  In 2014, there were 17 resolutions that addressed climate change or other environmentally related sustainable governance practices, and in 2015 there were 11—mainly asking for reports on what companies could do to help meet President Obama’s goal of reducing carbon emissions by 80 percent by 2050 and goals to reduce greenhouse gas emissions. [21]  Along with other institutional investors, the comptroller also asked fossil fuel companies to assess the impacts of policies to reduce greenhouse gas emissions. [22]

DiNapoli advanced this effort further in 2015 when he joined with New York City Comptroller Scott Stringer in a letter to U.S. Securities and Exchange Commission (SEC) Chair Mary Jo White calling on the SEC to be more aggressive in its efforts to compel companies in the fossil fuel industry to enhance disclosures of material risks of climate change. [23]

Beyond the CRF, the comptroller’s office is putting its stamp on New York’s climate strategy in other meaningful ways.  As an auditor of state agencies and local governments, it monitors compliance with state energy efficiency requirements. [24]

And within the Office of State Comptroller (OSC) itself, the comptroller’s green team is carrying out a number of climate-related initiatives, including the purchase of hybrid electric vehicles for the OSC fleet [25] and instituting low- or no-cost energy efficiency measures at the OSC’s main office in Albany. [26]

Start spreading the news

The comptroller’s actions have played a large part in helping New York achieve its GHG emission reductions, but the agency isn’t fighting the climate battle alone.  In July 2015, Bill de Blasio, the mayor of New York City, announced a move to power 100 percent of city government buildings with renewable energy sources. [27]  Among numerous other initiatives, the state government now offers grants and loans to New Yorkers who adopt renewable energy technologies and develop renewable energy businesses. [28]

In the latest rankings of most energy-efficient states by the American Council for an Energy-Efficiency Economy (ACEEE), New York was third, and its research and development initiative earned praise as an “outstanding model of an effective and influential research and development institution.” [29]

Similarly, the CRF’s sustainable investment practices are another kind of role model – showing that it is possible for institutional investors to integrate sustainability considerations into traditional portfolios, without compromising investment.

[8]  and
[21] The Office of the State Comptroller – Overview of State Investment Programs
[23] The Office of the State Comptroller – Overview of State Investment Programs