Main Banner

NEWS from the Office of the New York State Comptroller
Contact: Press Office 518-474-4015

DiNapoli: NYS Pension Fund Commits $1.3 Billion to Sustainable Investment Program

Commitments Aim to Capitalize on Climate Solution Opportunities

March 31, 2023

The New York State Common Retirement Fund (Fund) committed $1.3 billion to two funds as part of its Sustainable Investments and Climate Solutions (SICS) Program, State Comptroller Thomas P. DiNapoli, trustee of the Fund, announced today.

“These investments will position the Fund well for the future as the world transitions to a low-carbon economy,” DiNapoli said. “The Fund is a recognized leader in addressing climate-related investment risks and pursuing opportunities created by efforts to address the climate crisis. These latest commitments will help us protect the Fund’s long-term strength, transition its portfolio to net zero emissions by 2040 and position it for changes already happening in the markets.”

The Fund committed $1 billion to funds tracking the MSCI World ex-USA Climate Change Index, which is designed to address climate-related risks and opportunities by overweighting companies that will benefit from the transition to a low carbon economy, while underweighting those that face greater risks due to climate change. Key factors that are considered include a company’s carbon intensity, climate risk management, potential stranded assets, physical risk exposure and development of climate solution products and services.

“MSCI is committed to providing institutional investors information and tools that enable them to develop portfolios that address the climate crisis and fulfill their investment objectives,” said Remy Briand, Chief Product Officer and Head of Index at MSCI Inc. “The MSCI Climate Change Indexes consider both the opportunities and systemic risks associated with transition to a low carbon economy, enabling institutional investors such as retirement funds to integrate climate risk considerations in their global equity investment process,”

In 2022, the Fund committed $300 million to the Carval Clean Energy Fund II, a credit fund focusing on opportunities in clean energy, renewable energy, energy efficiency and energy storage, primarily in North America and Europe.

To date, the Fund has deployed over $18 billion, toward its goal of $20 billion, to specific investment opportunities in the SICS Program. The Fund has made commitments across asset classes including actively and passively managed public equity, fixed income, private equity, infrastructure and real estate.

DiNapoli also announced the Fund has completed its annual review of thermal coal and oil sands companies as part of its broader review of the transition readiness of energy sector investments that face significant climate risk.

Based on the annual reviews, the Fund will continue to restrict investments in 22 previously restricted coal companies and will newly restrict investments in six coal companies that have not demonstrated preparedness for the transition to a low-carbon economy: Alliance Resource Partners L.P., Geo Energy Resources Ltd., PT ABM Investama Tbk, PT Delta Dunia Makmur Tbk, PT Indonesia Asahan Aluminium (Persero), and Thungela Resources Ltd.

Of the nine oil sands producers evaluated, six failed to demonstrate transition readiness, including: Athabasca Oil Corp., Canadian Natural Resources Ltd., Cenovus Energy Inc., Husky Energy, Imperial Oil, and MEG Energy Corp., resulting in the Fund continuing to restrict investment in those companies.

The Fund will not directly purchase or directly hold debt or equity securities, or invest through an actively managed account or vehicle, in these restricted companies. Holdings in these companies will be sold by the Fund in a prudent manner and timeframe, including approximately $19.9 million in thermal coal and $27.9 million in oil sands securities.

Background on Climate Investment Actions

Since taking office in 2007, DiNapoli has been recognized as a global leader for his efforts to protect the Fund’s assets, address material risks from climate change, and pursue sustainable investment opportunities. In 2019, DiNapoli released a Climate Action Plan, a multifaceted strategy that includes a goal of committing $20 billion to sustainable investments, employing dedicated staff to pursue climate solution investments, and instituting minimum standards for portfolio companies to meet that will inform engagements, investments, and potential divestment decisions.

In December 2020, DiNapoli announced that the Fund has adopted a goal to transition its portfolio to net zero greenhouse gas emissions by 2040.

New York State Common Retirement Fund

The New York State Common Retirement Fund is one of the largest public pension funds in the United States. The Fund holds and invests the assets of the New York State and Local Retirement System on behalf of more than one million state and local government employees and retirees and their beneficiaries. It has consistently been ranked as one of the best managed and best funded plans in the nation.