US Pension Boards Drop BlackRock Over Futile CO₂ Plan
In Short
- The New York City Comptroller’s office calls on pension funds to restrict fossil fuel investments ahead.
- BlackRock, Fidelity, and PanAgora failed to deal with climate risks upon reviewing submissions.
New York City Comptroller Brad Lander has released the Net Zero Implementation Plan for three major pension funds: the New York City Employees’ Retirement System (NYCERS), Teachers’ Retirement System (TRS), and Board of Education Retirement System (BERS).
The latest update recommends that these pension boards consider dropping BlackRock, Fidelity, and PanAgora due to their decarbonisation plans not aligning with the climate goals set by the funds.
46 out of the 49 asset managers dealing in public market investments for the city have submitted climate plans that are pursuant to the pension funds’ net-zero strategy; however, these three failed to do so.
Read More: BlackRock Off Texas Blacklist After Climate Policy Exit
The three pension systems implemented Net Zero Implementation Plans in 2023 and have a goal of net-zero emissions by 2040. To this end, they have committed to setting emissions targets, engaging with companies on climate action, investing in climate solutions, and cutting exposure to fossil fuels.
"The systemic risk of the climate crisis threatens the long-term value of New York City’s pension funds. Our Net Zero plan is a core part of our fiduciary duty to protect these assets. "
Since 2019, they have already achieved a 37% cut in financed emissions and have invested $11.9 billion in climate solutions.
The deadline to submit decarbonisation strategies was mid-2025, which all public equity and corporate bond managers were required to follow. However, after reviewing the submissions, the Comptroller’s office noticed that BlackRock, Fidelity, and PanAgora failed to meet expectations.
"Today, I am calling on my fellow trustees to move our money away from the three asset managers – BlackRock, Fidelity, and PanAgora – who fail to address climate risk with the seriousness we expect," the Comptroller added.
These three asset managers have stopped climate engagement owing to SEC rules, which limited their ability to influence portfolio companies on climate risk. PanAgora, for instance, merely focused on emissions disclosure instead of encouraging businesses to adopt net-zero goals or transition plans.
By taking into account all other reasons as well, the Comptroller recommends rebidding BlackRock’s $42.3 billion mandate and terminating Fidelity and PanAgora mandates.
The new update spotlights the importance of direct engagement with larger emitters, particularly utility companies. The Comptroller’s team engaged over 100 companies to press for science-based targets and credible transition plans. But, there are worries regarding frameworks, including SMARTargets, which may result in greenwashing.
Also Read: MSCI Index Updates Cause BlackRock to Revise ESG Screens
The office is looking for better tools to help investors address climate-related risks.
In addition to this, it is coaxing the pension boards to expand their fossil fuel restrictions by banning future investments in midstream and downstream fossil fuel infrastructure, including pipelines and LNG terminals.
All in all, what is the object? It is to mitigate long-term climate risk, uphold the Paris Agreement, and protect pension fund returns.
***
Are you looking for expert guidance on sustainability for your business?
Explore our ESG solutions page, where you can connect with more than 1000 providers offering a broad range of sustainable services.
Stay up-to-date with regulatory developments through our Social & Governance News.
