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ESG USA keynote: Thomas Di Napoli, New York State Comptroller, Trustee, New York State Common fund
State finance chief talks ESG, engagement, BP, fracking and climate change.
Thomas DiNapoli
First and foremost, I’d like to applaud Responsible-Investor.com for putting together yet another impressive and thought-provoking conference.
Link to conference brochure
And I have to tell you how heartening it is to be among so many whose pointed words and concerted actions continue to promote sustainable economic growth here in the US and across the globe. The Office of State Comptroller, as trustee of the New York Common Retirement Fund, has been an active participant in efforts — often in partnership with many in this room — to promote the incorporation of environmental, social and governance factors into the investment process. As a large institutional shareholder focused on ensuring the long term value of our investments, we can’t afford not to be. As everyone in this room knows, at the most basic level our economy represents our adaptation to the environment. The global economy is made up of the multitude of interactions that allow us to meet our basic needs, and increasingly, much more than our basic needs. If we take more out of the environment than is sustainable, or if we fail to work together, we threaten our economy. This is the germ of the concept of sustainability, and our partners in this effort such as Ceres, Council of Institutional Investors and the Principles for Responsible Investment provide us with the tools and structure to help us move our economy in that direction.
The New York State Common Retirement Fund is currently valued at approximately $140bn. The fund is responsible for the retirement futures of one million state and local employees, retirees and beneficiaries. Every one of those one million members is a shareholder, and their interests drive each investment choice we make. Some have referred to large institutional funds like ours as perpetual investors. It’s an appropriate description. We’re investing today for employees who will retire in 30 or 40 years. We have a perpetual investment horizon. We must take the responsible approach, weighing risk against opportunity, always with that long-term horizon in mind. Our approach has been successful. According to the Pew Center and Governing Magazine, New York State’s is among the best-funded public retirement systems in America. Over the past twenty years, 83% of retiree benefits our fund pays out have been financed directly from investment returns, a number that’s significantly higher than the national average of 68%. This is the result of sustained sound investing, our conservative actuarial methods and the discipline to make our annual required contribution. By necessity, our fund – like similar large institutional funds – is highly diversified and invested in every sector of the economy, and it tends to rise or fall based on the state of the economy and the markets. And as our investments grow and diversify, our performance is increasingly tied to
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