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New York protects $210B fund from climate risks, with Stanford assistance

Jun 30, 2019
Precourt Institute

By Mark Golden

New York State’s $210-billion retirement fund for state employees will reduce investments that could lose value due to climate change and invest more in companies that offer solutions to protect the climate, State Comptroller Thomas P. DiNapoli announced.

Under the state’s Climate Action Plan and subject to fiduciary analysis, the New York State Common Retirement Fund may divest from companies that fail to meet minimum standards. The plan follows the recommendations made in April by the state’s Decarbonization Advisory Panel, of which Stanford University’s Alicia Seiger was one of six members. Seiger is managing director of the Precourt Institute for Energy’s Sustainable Finance Initiative at Stanford.

Head shot of Alicia Seiger
Alicia Seiger, managing director, Stanford's
Sustainable Finance Initiative

“This is a proactive plan to mitigate climate risk, capitalize on opportunities in the growing low-carbon economy and protect the fund’s long-term value,” DiNapoli said in a press release. “The plan builds on the important work of the Decarbonization Advisory Panel.”

As a first step, the fund will develop investment standards for coal companies, followed by other major industries that present climate risk to the fund. The fund will also double from $10 billion to $20 billion over the next decade its Sustainable Investment–Climate Solutions Program. Dedicated staff will be hired to identify sustainable investment opportunities.

“The comptroller’s plan goes a long way toward our panel’s bold ambition,” said Seiger. “It is a road map for aligning large investment portfolios with climate risk and opportunity, and it reflects the kind of translational research the Sustainable Finance Initiative develops and promotes.”

Under DiNapoli’s plan, which does not require state legislative approval, the fund will continue to engage portfolio companies to support climate risk management, planning and reporting. It will also refine how it evaluates external fund managers.

“Other pension funds and investment managers would be well served to use the fund’s Climate Action Plan as a blueprint for their inevitable move to climate resiliency,” said Joy-Thérese Williams, who chaired the advisory panel and is senior advisor at Mantle314,

Seiger is also managing director of Stanford’s Steyer-Taylor Center for Energy Policy & Finance and a lecturer in law. Law professor emeritus, Thomas Heller, is the faculty director of the Sustainable Finance Initiative, which is supported by Bank of America.

The Precourt Institute for Energy, led by professors Sally Benson and Arun Majumdar, is the hub of energy research and education at Stanford, from science and technology to economics and policy.

Media contact: Mark Golden, Precourt Institute for Energy, mark.golden@stanford.edu, 650-724-1629