Mayor Bill de Blasio, Comptroller Scott Stringer and other trustees of New York City’s five pension funds, which hold $189 billion in assets, on Wednesday announced a goal to divest city funds from fossil fuels within five years.
De Blasio also said New York has filed a lawsuit against the five largest investor-owned fossil fuel companies as measured by their contributions to global warming.
The city will seek damages from BP, Chevron, ConocoPhillips, Exxon Mobil and Royal Dutch Shell for the billions of dollars the city will spend to offset the effects of climate change, including future expenses.
In so doing, New York is following the legal footsteps of several California local governments that now face a countersuit from ExxonMobil challenging what the oil giant describes as their failure to inform investors of the climate risks facing their jurisdictions.
New York would be the first major U.S. pension plan to divest from fossil fuel reserve owners, De Blasio and Stringer said in a joint statement. They said they will submit a joint resolution to pension fund trustees to begin analyzing ways to divest from fossil fuel owners “in a responsible way that is fully consistent with fiduciary obligations.”
In total, the city’s five pension funds hold roughly $5 billion in the securities of more than 190 fossil fuel companies.
“As climate change continues to worsen, it’s up to the fossil fuel companies whose greed put us in this position to shoulder the cost of making New York safer and more resilient,” said de Blasio.
The lawsuit seeks to recover the billions needed to fund climate change resiliency measures necessary to protect the city, its property, and its residents from the effects of climate change.
This includes physical infrastructure such as coastal protections, upgraded water and sewer infrastructure and heat mitigation, as well as public health campaigns, for example to help protect residents from the effects of extreme heat.
The city is already executing resiliency program estimated at more than $20 billion to protect New Yorkers and build resilience against rising seas, more powerful storms and hotter temperatures.
“It’s complex, it will take time, and there are going to be many steps,” said Stringer. “But we’re breaking new ground, and we are committed to forging a path forward while remaining laser-focused on our role as fiduciaries to the systems and beneficiaries we serve.”
The city’s five pension funds are the New York City Employees’ Retirement System, the Teachers’ Retirement System of the City of New York, the New York City Police Pension Fund, the New York City Fire Department Pension Fund and the New York City Board of Education Retirement System.
The first step is for the trustees at each fund, said Stringer, to instruct Stringer’s Bureau of Asset Management to commission an analysis of the proposed divestment and advise the trustees as to the anticipated impact on the risk and return characteristics of the portfolio.
The trustees will also seek legal opinion as to whether carrying out the divestment would comply with trustees' fiduciary duties to beneficiaries. Assuming a positive legal opinion, the trustees would then instruct the bureau to carry out the divestment with specified steps and timelines.
In the case of this divestment, said Stringer, transactions would probably occur in stages to reduce transaction and implementation costs.