New York City funds plan allocations to Nordea and Pictet for climate contracts

European managers look set to oversee NYC public equities climate solutions mandate

The Office of the New York City Comptroller, which oversees the City’s five public pension funds, representing $270bn in assets, is lining up Pictet Asset Management and Nordea Investment Management for “climate change solutions” mandates covering listed equities.   

Last year, the asset management division of New York City held two contract award hearings, one in October and the other in December, naming Swiss-based Pictet and the US arm of Nordea Asset Management, respectively, as recipients of “proposed” contracts for “Public Equity Climate Change Solutions Investment Management Services,” worth around $8m each, according to the notices.  

RI understands that both Nordea and Pictet have now been approved for allocations from several of New York City’s pensions funds and that contracts are being negotiated.   

In 2018, New York City’s then Comptroller, Scott Stringer, announced that the City’s funds would explore divesting fossil fuels and invest $4bn in climate change solutions by 2021. In March last year, that figure was raised to $6bn.   

Three of New York City’s five pension funds are pursuing fossil fuel divestment after voting to do so in early 2021. They are: the New York City Employees’ Retirement System and New York City Teachers’ Retirement System and The New York City Board of Education Retirement System.    

Divestment feasibility studies by investment giant BlackRock and US consultant Meketa on behalf of New York City, made public in March, suggested that, based on backward-looking analysis, divesting fossil fuels does not harm – and may even boost – returns.   

Former Comptroller Stringer did not stand for reelection last year and was replaced by Brad Langer in the role this month. His bid to become the mayor of New York City was derailed last year by reports of alleged historical sexual misconduct, which he has denied.   

During Stringer’s tenure as New York City Comptroller, the City’s governance department also launched the Boardroom Accountability Project to push companies to include proxy access rules in their bylaws, giving shareholders the ability to nominate a director candidate of their own. Since its launch in 2014, more than 540 US companies now have proxy access rules in their articles.   

According to the contract award hearing documents, the proposed contracts with Nordea and Pictet will run until October 2024, with the “option to renew for up to an aggregate of six (6) additional years”. The value of the proposed contract with Nordea is $8.4m and the one with Pictet is $7.9m.  

Nordea and Pictet have not commented at the time of writing.