The job of pension fund managers is to maximize returns for retirees who depend on them. Yet activists have been surprisingly adept in years past at pushing funds to prioritize environmental activism over generating shareholder value. Brad Lander, soon to be New York City’s former comptroller, has used his final days in office to push that radical agenda at the expense of the people he is meant to serve.
A big part of Lander’s current job, which ends Wednesday, is serving as a trustee for the public pension funds that more than 750,000 city workers are counting on. But, with backing from Mayor-elect Zohran Mamdani, Lander is now challenging Rep. Dan Goldman from the left in June’s Democratic primary.
Last month, Lander tried to bolster his climate bone fides — and give himself a signature campaign issue — when he called on the city’s pension boards to transfer billions in funds invested with BlackRock, Fidelity and PanAgora Asset Management to competing firms that are more aggressive about “decarbonizing” their portfolios.
BlackRock oversees $42.3 billion in index funds for city pensions while Fidelity and PanAgora oversee $384 million and $358 million respectively. Lander decided to spare PanAgora from his climate crusade when the manager coughed up “an enhanced net zero plan.”
Fortunately for New Yorkers, Lander appears to have been foiled — at least for now. The board of the New York City Employees’ Retirement System, one of the boards, voted at Lander’s final meeting on Dec. 17 to table his recommendation until January. It’s a welcome signal that the fad of ESG investing (short for Environmental, Social and Governance) continues to fade.
BlackRock accused Lander of taking part in the “politicization of public pension funds” while Lander argues that “the systemic risk of the climate crisis threatens the long-term value of New York City’s pension funds.”
BlackRock and its leader Larry Fink leaned into ESG during a different political moment. But that changed after Texas passed a law blacklisting BlackRock for its fossil fuel “boycott,” and GOP state attorneys general accused it of manipulating energy markets with its ESG approach. In February, the Securities and Exchange Commission issued guidance aimed at limiting the consideration of ESG factors when investing.
No doubt climate change will have an effect on markets for decades to come, but savvy asset managers will be able to address it without allowing nebulous climate goals to undermine their fiduciary responsibilities. There’s a difference between prudent investment calculations and political posturing.
Under New York’s previous comptroller, Scott Stringer, the city’s pension funds dropped $4 billion of investments in fossil fuel companies. Two years ago, Lander got three of the city’s five pension funds to adopt plans to zero out emissions from their portfolios by 2040. The police and firefighter pensions refused to go along.
This is part of a trend, from Albany to Brussels. After setting unrealistic net-zero emissions goals, governments continue to recalibrate.
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