Mayor de Blasio announced today that he will be pushing for the divestment of the city’s pension funds from investments in coal. The Mayor has also proposed that New York City’s public sector pension funds, worth over $160 billion, develop a long-term strategy relative to all fossil fuels in order to “further reduce contributions to climate change while protecting retirees.”
“New York City is a global leader when it comes to taking on climate change and reducing our environmental footprint. It’s time that our investments catch up – and divestment from coal is where we must start,” said the Mayor in a statement.
Noting that the Mayor’s announcement came the day after a White House summit on how to expand offshore wind power projects, U.S. Environmental Protection Agency Regional Administrator Judith Enck stated that, “every level of government has a vital role to play to reduce carbon pollution that threatens our children’s future.”
The city’s five pension funds’ assets total over $160 billion. This includes at least $33 million of exposure to thermal coal alone in the public markets, reports the Mayor’s Office.
Perhaps the pension funds will eventually consider investing in the Long Island – New York City Offshore Wind Project, which has been described as the largest potential offshore wind project in the U.S. If executed, almost 200 3.6-megawatt wind turbines would be constructed 13 miles off the Rockaway Peninsula. The project is currently working its way through a multi-year federal review process.
Making the case that divesting from fossil fuels is smart financially
The de Blasio administration says it will meet with the city’s five primary pension boards over the coming months to “examine the specific impact and optimal reallocation of these assets [currently invested in fossil fuels].”
The city’s five primary pension funds are administered on behalf of public school teachers and other Board of Education employees, police and fire department personnel, along with employees from other city agencies.
According to the Mayor’s Office, an initial analysis has found that divestment from coal “poses little risk to pension fund returns, especially given the federal EPA’s new clean power plant rules and increased regulatory limitations on emissions, which help reduce the attractiveness of thermal coal as an investment.”
John Adler, who directs the Mayor’s Office of Pensions and Investments, argues that investing in coal at this juncture is risky. There is an urgent need, Adler says, to “address the risks that climate change poses to the long-term performance of the pension funds that protect the futures of our over 700,000 beneficiaries.”
Striving towards an 80 percent reduction in greenhouse gas emissions
Taking action on pension fund investments is the de Blasio administration’s latest initiative related to climate change. The city has set the goal of an 80 percent reduction [relative to 2005 levels] in greenhouse gas emissions by 2050, and the cleanest air of any large U.S. city by 2030.
“Divesting from coal reflects both our emissions reduction and clean air goals,” said Nilda Mesa, Director of the Mayor’s Office of Sustainability, in a statement. “Ozone that drifts to NYC from coal-powered plants is a major source of smog, which affects our most vulnerable populations… We should be investing in energy sources that lower greenhouse gas emissions, as well as make our air cleaner.”
The de Blasio administration says it also plans to “dramatically” increase the use of renewable energy in New York, including a new initiative to power 100 percent of city government operations from renewable sources.
Referring to the twin goals of reducing carbon emissions 80 percent by 2050 and moving towards renewables, the Mayor noted that, “we’re going to need every city asset helping us achieve them.”
Photo credit: Escuela de Organizacion Industrial