Pension fund pledges net-zero emissions

The fund will finish a review of its fossil-fuel holdings and related businesses within four years

The New York State Common Retirement Fund, the third-largest U.S. public pension plan, said it may divest from the riskiest oil and gas companies by 2025 and pledged to reach net-zero greenhouse gas emissions across its investments by 2040, one of the biggest climate moves by a major public fund.

The $226.4 billion fund also said it will finish a review of all its fossil-fuel holdings and related businesses within four years. The focus will be on how businesses are preparing for the transition to a low-carbon economy.

Achieving net-zero carbon emissions by 2040 will put the fund in a strong position for the future mapped out in the Paris Agreement, Comptroller Thomas P. DiNapoli said in a statement on Wednesday.

The New York fund initiated a climate action plan last year to address risks across its investment portfolio, and as a result, it said in July it would sell shares in 22 thermal coal mining companies. DiNapoli, the sole trustee of the plan, has faced pressure from environmental advocates, scientists, and some lawmakers to fully divest high-carbon emitters. The pension fund was among the 40 largest shareholders of Exxon Mobil Corp. at the end of September, owning 8.5 million shares.

Other large pension investors have taken action to reduce their carbon footprints, including the California Public Employees’ Retirement System and Australia’s Retail Employees Superannuation Trust, which have committed to transition their investments to net-zero emissions by 2050.

New York’s announcement is the “biggest leap forward worldwide on climate finance action in 2020,” the #DivestNY coalition, a group of environmental advocates, said in a statement. It’s “the most comprehensive program” to divest from fossil fuels, decarbonise across a massive portfolio, and put major financial pressure on publicly traded companies, the group said.