NYC’s ESG investment approach draws pushback (2023)
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New York City Comptroller Brad Lander (D) has made ESG and fossil fuel divestment two of his priorities for the city’s pension plans. Now—in the wake of lawsuits filed against three of those pension plans—Lander’s investment strategy is drawing more pushback and generating national media coverage. The Washington Examiner ran a piece about Lander on July 19, describing his ESG support and the pushback against his policies:
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New York City is leading the charge to exclude fossil fuel companies from pension funds despite pushback to ESG from Republicans at the state and national levels. The Big Apple has, largely across the board, been working to cut greenhouse gas emissions in an effort to curtail climate change. But it stands apart in its ambitious embrace of environmental, social, and governance investment principles, collectively known as ESG. Proponents of ESG investing, such as New York City Comptroller Brad Lander, who oversees the city’s pension plans, see ESG investment strategies, for example, moving away from investments in the fossil fuel industry, as compatible with fiduciary duty, as they contend divestments help safeguard plan beneficiaries from the longer-term financial risks associated with disruption from climate change. But critics, including Republican attorneys general and state treasurers across the country, see ESG investing as a breach of fiduciary duty. They contend that the ESG push is a way for liberal climate goals to be injected into the private market without the use of the ballot box, and that fund managers that do so are violating their duty to get beneficiaries the best returns on investment. Now the board of trustees of three different pension systems is facing a lawsuit over the 2021 decision for three funds to divest from fossil fuels. The lawsuit argues that the New York City Employees’ Retirement System, the Teachers’ Retirement System, and the Board of Education Retirement System are all in violation of their fiduciary duties by committing to having net-zero emissions in their portfolios by 2040. Lander, a Democrat, is not buckling to the pressure in what could be a test case for further moves to forward ESG investing and divestment from the fossil fuel space in municipalities across the country. He contends that critics on the Right have made ESG a political hot potato and that the move toward ESG investing shouldn’t be an inherently political matter. … The lawsuit, which was filed in May by a group of public employees, seeks unspecified damages, including reimbursement of losses from the divestment. The lawsuit claims that the defendants breached their fiduciary duties and abused control over their plan assets by divesting some $4 billion in holdings in companies involved in the extraction of fossil fuels, something that the complaint characterized as an “ineffectual gesture to address climate change. “This unlawful decision to elevate unrelated policy goals over the financial health of the Plans is flatly inconsistent with the Defendants’ fiduciary responsibilities, and jeopardizes the retirement security of Plan participants and beneficiaries,” the complaint reads. … Will Hild, the executive director of the conservative group Consumers’ Research, which has been a major critic of ESG, said the lawsuit will be watched closely given the broader implications of ESG and how municipalities handle these sorts of issues. “I think that just the filing of this case is going to send shockwaves through public officials who have been politicizing and weaponizing their states and localities' pension funds in violation of the law,” he told the Washington Examiner. Hild also said that the discovery is going to have big implications “because it is going to force the comptroller to admit the myriad ways they have been colluding with other players, other pension funds, other major asset managers in ways that are completely outside of their legal authority.”[1] |
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See also
- Environmental, social, and corporate governance (ESG)
- Economy and Society: Ballotpedia's ESG newsletter
External links
Footnotes
- ↑ Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
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