{"id":776,"date":"2018-01-06T01:41:21","date_gmt":"2018-01-05T20:11:21","guid":{"rendered":"https:\/\/ga-institute.com\/to-the-point\/?p=776"},"modified":"2018-01-28T01:44:45","modified_gmt":"2018-01-27T20:14:45","slug":"investors-focus-on-climate-change-ghg-emissions-at-fossil-fuel-companies-and-other-public-companies-beyond-the-energy-sector","status":"publish","type":"post","link":"https:\/\/ga-institute.com\/to-the-point\/investors-focus-on-climate-change-ghg-emissions-at-fossil-fuel-companies-and-other-public-companies-beyond-the-energy-sector\/","title":{"rendered":"INVESTORS FOCUS ON CLIMATE CHANGE, GHG EMISSIONS at Fossil Fuel Companies \u2013 and Other Public Companies Beyond the Energy Sector"},"content":{"rendered":"

\"\"A growing number of institutional investors are focused on \u201cDe-carbonizing\u201d their investment portfolios \u2013 New York City Pension Funds in the Lead…<\/em><\/strong><\/span><\/h3>\n

But the issues are not clear-cut, and the debate goes on among key players in the capital markets\u2026on the investor and corporate sides.<\/em><\/strong><\/span><\/h3>\n

One of the leaders of one of the nation\u2019s most activist investors \u2013 the New York City’s<\/strong> public employee pension funds \u2013 announced as the year 2017 was ending consideration of a plan that would lead to \u201cde-carbonizing<\/strong>\u201d the five funds\u2019 portfolios.<\/p>\n

New York City Comptroller Scott M. Stringer<\/strong>, who works with the [five] funds\u2019 trustees to help manage the retirement system, is proposing ways to:<\/p>\n

    \n
  1. divest fossil fuel stocks (and)<\/li>\n
  2. increase investments in clean energy companies.<\/li>\n<\/ol>\n

    The 5 funds hold $160 billion in AUM (as of October 2017).<\/p>\n

    \"\"This asset base makes NYCERS<\/strong> the fourth largest public pension plan in the United States. One-third of the assets are in U.S. equities; there are also investments in P\/E; in Hedge Funds; in Private Real Estate; in Fixed-Income; REITs; and in International Equity.<\/p>\n

    Comptroller Stringer is elected city-wide and serves as investment advisor and custodian of assets for the five funds \u2013 those of Teachers, Police, Fire, NYC employees, and Board of Education non-teaching employees.<\/p>\n

    The Proposed Steps<\/strong><\/h2>\n

    On December 19, 2017, Comptroller Scott Stringer stated: \u201c\u2026my office will bring a proposal to the trustees of the NYC pension funds in the coming weeks to examine ways to de-carbonize the portfolios, including the feasibility of ceasing additional investments in fossil fuels, divesting current holdings in fossil fuel companies, and increasing investments in clean energy.\u201d<\/p>\n

    Update<\/strong>:\u00a0 January 11, 2018<\/p>\n

    The City of New York today filed lawsuits against five energy companies over their impact on global warming.\u00a0 (Royal Dutch Shell, BP, Chevron, ConocoPhilips<\/strong>, and ExxonMobil<\/strong> were named.)\u00a0 The City also said it would begin to divest fossil fuel companies from its pension funds within the next five years.<\/p>\n

    The City claims the energy companies “were well aware of the effects that burning fossil fuels would have on the planet’s atmosphere and the expected impacts of climate change as far back as the 1980s” — and a campaign of deception and denial and about warming was conducted.<\/p>\n

    Damages sought:\u00a0 The “billions that the City will have to spend protect New Yorkers from the effect of climate change [and] damages necessary to address harm we expect to happen…”<\/p>\n

    New York City has a $20 billion-plus “resiliency” program underway to protect against rising seas, more powerful storms and hotter temperatures.<\/p>\n

    The NYC funds have $189 billion in AUM and holds $5 billion in 190 fossil fuel companies.<\/p>\n

    # # #<\/strong><\/p>\n

    …Meanwhile at the State Level in New York\u2026<\/strong><\/p>\n

    \"\"New York State Governor Andrew Cuomo<\/strong> expressed similar sentiments about the huge NYS Common Fund<\/strong> holdings \u2013 that portfolio has more than $200 billion in AUM.<\/p>\n

    Governor Cuomo proposed on December 19th (2017) that the New York State Common Retirement Fund<\/strong> stop all new<\/em> investments in fossil fuel companies — and plan to divest existing fossil fuel investments.<\/p>\n

    The proposal, Cuomo said, \u201c\u2026lays out a roadmap for the Common Fund to take responsible steps to divest from fossil fuel holdings.\u201d<\/p>\n

    State Comptroller Thomas DiNapoli<\/strong> immediately pushed back, saying: \u201cThere are no immediate plans to divest energy holdings.\u201d The Common Fund does not disclose its fossil fuel holdings (much of its investments are indexed).<\/p>\n

    The Fund did set up a $2 billion \u201clow-carbon index<\/strong>,\u201d to shift some investments \u201cfrom the worst emitters to companies that work to reduce their GHG emissions”. That fund will be expanded in 2018.<\/p>\n

    Some Interesting Notes<\/strong><\/h2>\n

    There are four leadership positions to be elected statewide in 2018: Governor, Lt. Governor, Attorney General, and Comptroller. The State Comptroller is the sole trustee<\/strong><\/em> of the Common Fund and has enormous leverage in deciding fund investments. About $5 billion of its AUM is targeted for responsible investme<\/strong>nt<\/strong><\/em>. That commitment is growing, said Comptroller DiNapoli.<\/p>\n

    The Governor and Comptroller are both prominent liberal Democrats and will stand for re-election on the same party line.<\/p>\n

    Comptroller DiNapoli was an elected NY State Assembly<\/strong> member and long-time chair of that chamber\u2019s proactive Environmental Committee<\/strong>, where he was an advocate for greater environmental regulation.<\/p>\n

    Today, he is a prominent player among U.S. pension fund fiduciaries in activist proxy and corporate engagement campaigns — for example in encouraging public company boards and management to analyze the risks and opportunities presented by climate change and then to disclose those analyses and plans to meet to the challenges to the public\u2026and especially to investors.<\/p>\n

    The Governor and Comptroller quickly agreed to create an Advisory Council to help the Common Fund develop a roadmap for divesting fossil fuel stocks.<\/p>\n

    # # #<\/strong><\/p>\n

    Investor Campaign \u2013 Climate Action 100<\/strong><\/h2>\n

    \"\"Even with dis-investment of fossil fuel and other equities being discussed at the individual fund(s) level, an influential group of investors organizing as \u201cClimate Action 100<\/strong>\u201d set out on a comprehensive campaign, and said \u201ccompanies hiding from climate risk is becoming harder\u201d — and therefore, effecting change at companies, not portfolio dis-investment alone, will make a difference.<\/p>\n

    The campaign of \u201cClimate Action 100\u201d is now underway in the United States, UK, Europe, and Asia-Pacific.<\/p>\n

    While early in 2017, in fulfilling a campaign promise President Trump<\/strong> began the process of having the United States withdraw from its commitments reached at the COP 21 \u201cParis Accord<\/strong>\u201d on climate change, a growing universe of investors is pushing ahead in the opposite direction.<\/p>\n

    A follow-up COP 23 meeting staged in December 2017 in Paris was arranged by President Emmanuel Macron<\/strong> as the \u201cOne Planet Summit<\/strong>,\u201d with more than 50 world leaders participating.<\/p>\n

    The goal was to organize to drive the public and private sectors in \u201caccelerating\u201d the de-carbonization\u201d of the global economy. Investors were enthusiastic participants.<\/p>\n

    In line with the meeting theme, more than 200 investors with $26 trillion in AUM pledged to engage with 100 companies estimated to be responsible for about 85% of total GHG emissions.<\/p>\n

    The \u201cClimate Action 100\u201d movement is being coordinated by five partners:<\/p>\n