Enhanced financial commitment from New York pension fund toward a climate change-focused stock index
The New York State Common Retirement Fund, with assets totaling $267.7bn, is taking significant strides to address climate change risks in its investments.
In line with this commitment, the fund has deployed over $22bn to its Sustainable Investments and Climate Solutions program. One of the key initiatives within this program is the $2bn additional investment to the MSCI World ex-USA Climate Change Index strategy.
The MSCI mandate, which the fund initially allocated $1bn in March 2023, aims to address climate-related risks by increasing the weighting of companies that engage in climate solutions and decreasing the weighting of companies that face greater climate transition risks.
The fund has also been active in engaging with portfolio companies. During the 2024 proxy season, it reached climate-related agreements with five companies, including Realty Income, which has agreed to adopt and publish a low-carbon transition plan.
Other companies, such as McDonald's and WEC Energy Group, have also made commitments. McDonald's has agreed to assess supply chain water-related business risks and set water quality and quantity targets, while WEC Energy Group has committed to publicly disclosing a feasibility study on integrating climate metrics into its executive compensation plan.
In addition, Southwest Airlines and steel-maker Cleveland-Cliffs have agreed to set greenhouse gas emissions reduction targets. Both companies have also agreed to publicly disclose their climate transition action plans, following in the footsteps of Realty Income.
The New York State Common Retirement Fund has also made investments in various funds. It has committed $450m to EQT Fund VI, $375m to Fundamental Empire Fund, and $300m to Copenhagen Infrastructure V. Moreover, it has invested $200m in Caryle Renewable and Sustainable Energy Fund II.
P. DiNapoli, the Comptroller of New York State, emphasised the urgency of addressing climate change, stating that it is an increasingly urgent risk facing all investors. The New York State Common Retirement Fund's focus on fostering long-term financial success by addressing climate-related risks in its investments reflects this sentiment.
In conclusion, the New York State Common Retirement Fund is leading the way in addressing climate change risks in its investments. By engaging with companies, making strategic investments, and setting ambitious targets, the fund is demonstrating its commitment to a sustainable future.
