Archive: Business & Technology

New York State Comptroller Thomas P. DiNapoli today at the Investor Summit on Climate Risk at the United Nations announced a $2 billion increase to the New York State Common Retirement Fund's (Fund) low emissions equities index, doubling its investment. The Fund was the first public pension fund in the U.S. to create an index that excludes or reduces holdings in the worst carbon emitters and shifts investments to lower emitting corporations. The increased allocation, from the Fund's regular index holdings, raises the current value of the Fund's sustainable investments to more than $7 billion.

"We've successfully shifted significant holdings to lower carbon companies without losing value," DiNapolisaid. "Our state pension fund is at the forefront of the worldwide effort to build a lower carbon economy. Our investment decisions and our shareholder engagements are a caution to corporations: if they're not helping build a decarbonized future, they may get left behind. Our strategy for sustainable, lower carbon investing is working and will continue to expand."

"Managing climate risk is key to protecting positive long-term investment returns," said the Fund's Chief Investment Officer Vicki Fuller. "The success of our low emissions index ensures its ability to expand further in the years to come and demonstrates to other institutional investors that we can decarbonize our portfolios prudently and without risking value."

"Today's announcement by the New York State Common Retirement Fund is a prudent and responsible step to manage the risks of climate change, and seize the opportunities of the clean energy future," said Mindy S. Lubber, president and CEO of the sustainability nonprofit organization Ceres,which directs the Ceres Investor Network on Climate Risk and Sustainability.The Ceres Investor Network includes more than 145 institutional investors who collectively manage over $22 trillion in assets. "Tackling climate change requires a colossal shift in investment capital flows toward clean energy and away from high polluting fossil fuel energy. This announcement helps achieve this shift and provides an example of the kind of innovation institutional investors can undertake."

"We applaud Comptroller DiNapoli for doubling the investment to the low emissions index fund," said Peter M. Iwanowicz, Executive Director of Environmental Advocates of New York. "Through these investments, the pension fund encourages innovation and moves companies closer to the 100 percent renewable energy economy we need."

The index, which is internally managed by the Fund, was developed with assistance from Goldman Sachs Asset Management (GSAM) and launched in January 2016. It is modeled on the Fund's existing indices of domestic stocks, particularly the Russell 1000, which are passive investments in the largest domestic companies with returns that match broad market performance.

"As we continue to face significant climate and environmental challenges, GSAM is committed to helping the Fund achieve its goal of identifying the risks and investment opportunities climate change presents to its long-term success," said Hugh Lawson, Global Head of ESG and Impact Investing at GSAM. "The Fund is a market leader in developing a multi-faceted and rigorous approach in doing this, and low emissions investing along with engagement is an important piece of this work."

The low emission index underweights stock ownership in some of the worst greenhouse gas emitters based on independent emissions data reported to the CDP(Carbon Disclosure Project) and increases investments in companies with lower carbon emissions with returns that closely track the Russell 1000 index. The carbon footprint of DiNapoli's low emissions index is 75 percent lower than its benchmark.

The low emissions index has performed as expected within close proximity to the Fund's indices posting an audited, annualized investment return of 16.5 percent from its inception on Jan. 1, 2016 to Dec. 31, 2017, compared with the Russell 1000's return of 16.8 percent.

The Fund has been recognized as the top U.S. investor, and third globally, for its efforts to combat climate change by the Asset Owners Disclosure Project. In addition, DiNapoli's international leadership in addressing investment risk arising from climate change resulted in his participation in both COP 21 in Paris and COP 23 in Bonn, where he was invited to present on the Fund's accomplishments.

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