Three New York City public retirement funds have filed a motion to dismiss a “baseless” legal action by four future beneficiaries over their decision to divest fossil fuels.
The lawsuit, filed in May, claims that the Teachers’ Retirement System, New York City Employees’ Retirement System and Board of Education Retirement System breached their fiduciary duties by voting in 2021 to stop investing in publicly traded securities of fossil fuel reserve owners.
The motion seeks dismissal because the plaintiffs – four public employees who are future pension beneficiaries – will suffer no harm irrespective of the decision to divest.
“They will get paid the same retirement benefits no matter how well, or poorly, the pension plans’ investment choices play out,” it states, adding that this is something that the filers themselves had conceded.
The legal action by the workers was filed along with Oklahoma-based advocacy group Americans for Fair Treatment.
The pension funds also rejected the “meritless arguments” against their decision to divest, including that they did so without financial analysis.
They described the divestment process as a “deliberative and extensive fiduciary process, which assessed portfolio exposure to fossil fuel stranded asset risk, industry decline and other financial risks stemming from climate change”.
That process included divestment feasibility studies being undertaken by investment giant BlackRock and US consultant Meketa in 2020 on behalf of the New York City funds.
“The arguments in this lawsuit are a weak attempt by anti-ESG, anti-union forces to undermine the decisions by our pension system trustees to assess the very real risks of climate change to their portfolios,” said New York City comptroller Brad Lander, whose office oversees the city’s five public pension funds.
“Rather than advancing the actual interests of our City’s public employees and retirees, the lawsuit seeks to protect companies that continue to focus on fossil fuels despite the ongoing and necessary transition to a low carbon economy,” he added.
“The courts should call this lawsuit what it is and dismiss it with prejudice.”