NYC fund mandates $500m to environmental investments

Public funds in US investor coalition expected to follow suit.

The $154.5bn (€98bn) New York State Common Retirement Fund is to invest $500m (€318m) in environmental investment strategies over the next three years. A number of the largest US public pension funds are expected to match its commitment in the coming months as part of a coalition of more than forty leading US and European institutional investors representing $1.75 trillion that recently pledged to invest $10bn in clean technology opportunities over the next two years. The coalition, which includes the New York State Common Fund, is co-coordinated by Ceres, the US environmental investor group. Announcing the launch of the fund’s Green Strategic Investment Program, New York State Comptroller Thomas DiNapoli, said: “Clean technology and renewable energy have become increasingly profitable. It’s not just about doing good for the environment; going green is good for the bottom line too. The Common Retirement Fund has a unique opportunity to produce strong, risk-adjusted returns while at the same time supporting our goal of curbing greenhouse gas emissions and decreasing our dependence on foreign energy sources. This investment commitment will put us half a billion dollars ahead of the green curve.” The fund already has $40m invested in private equity funds focused on renewable energy and clean technologies and $440 million in commitments to funds where clean tech is a component of the overall strategy. DiNapoli said the fund had been reviewing the clean tech and renewable energy sectors for potentialprivate equity investments since 2005.
Other goals outlined by the Ceres-led investor coalition include a 20% reduction in energy used in property investment holdings over the coming three years. The investors said they would also be placing green building standards at the core of future investment decisions. Significantly, the investor coalition said it would commit investment managers to report on how they are assessing climate risks in their portfolios, whether from new carbon-reducing regulations, physical impacts or competitive risks. The investor coalition, said the action plan sought to boost investments in energy efficiency and clean energy technologies and require tougher scrutiny of carbon-intensive investments. Its nine goals also included policy actions aimed at prodding the US Securities and Exchange Commission (SEC) and Congress into action on requiring corporations to disclose of climate change risks and opportunities. The coalition said it would also lobby the US Congress for a mandatory national policy to reduce greenhouse gas emissions in accordance with the 60-90% reductions below 1990 levels by 2050 that scientists advocate. Other goals include improved engagement with companies over their disclosure and responses to climate change and the encouragement of analysts and rating agencies to report on the potential impacts of long-term carbon costs, particularly on carbon-intensive investments such as new coal-fired power plants, oil shale, tar sands and coal-to-liquid projects.