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Comptroller DiNapoli, releasing the fourth annual Climate Action Plan Progress Report, reported the New York State Common Retirement Fund (Fund) "reached climate-related agreements with five portfolio companies during the 2024 proxy season and added $2 billion to the MSCI World ex-USA Climate Change Index strategy".
“As trustee of
the Fund, one of my top priorities is safeguarding the investments made for the
benefit of the more than one million participants in the
The Fund reached
agreements with Southwest Airlines Inc. and steel-maker Cleveland-Cliffs Inc.
to set greenhouse gas emissions (GHG) reduction targets and publicly disclose
climate transition action plans. The utility WEC Energy Group Inc. agreed to
publicly disclose a feasibility study on integrating climate metrics into its
executive compensation plan. McDonald’s Corp. agreed to assess supply chain
water-related business risks and/or set water quality and quantity targets,
while Realty Income Corp., a real estate investment trust, agreed to adopt and
publish a low-carbon transition plan.
DiNapoli also
made an additional investment of $2 billion to a fund tracking the MSCI World
ex-USA Climate Change Index, which is designed 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 index aims to reduce its overall Scope 1, 2, and 3 greenhouse gas
emissions intensity by a minimum of 30% relative to its benchmark. The
investment follows an initial allocation of $1 billion made
to this strategy in March 2023.
Proxy Votes:
In February, the Fund amended its proxy voting guidelines to include updates on the Fund’s expectations for portfolio companies’ climate performance including climate transition plans, and comprehensive disclosure of such plans, climate risks, risk management, governance, targets, metrics, and opportunities. It also provided more clarity regarding physical risk, deforestation, and the potential impacts of biodiversity loss.
During the 2024
proxy season, the Fund withheld support from or voted against 1,900 individual
directors at over 600 portfolio companies that lacked robust climate risk management,
including ConocoPhillips Co., Lockheed Martin Corp., and Exxon Mobil Corp. The
fund also supported the following shareholder proposals: Southern Co., seeking
disclosure of short- medium- and long-term operational GHG targets; Chevron
Corp., seeking disclosure of how reductions in virgin plastic demand may impact
its financial position; and Amazon.com Inc., seeking disclosure of how it is
addressing the impact of its climate change strategy on key stakeholders.
SICS Investments:
To date, the Fund
has deployed over $22 billion, towards its goal of $40 billion, to specific
investment opportunities across asset classes in its Sustainable Investments and Climate Solutions (SICS)
program, the majority of which are investments in climate solutions.
Investments include actively and passively managed public equity,
climate-oriented index funds, green bonds, sustainable infrastructure funds, and
real estate investments with energy efficient buildings.
Investments over
the past year include:
·
Copenhagen
Infrastructure V (€300 million), a
Danish investment firm specializing in renewable energy infrastructure assets,
including onshore and offshore wind, that contribute to a green energy
transition.
·
Carlyle
Renewable and Sustainable Energy Fund II ($200 million), a North American
private equity fund that makes targeted investments in renewable energy
sources, such as solar, wind, battery energy storage systems and energy
transition, electric vehicles, distributed energy resources, and
decarbonization technology solutions principally in Organization for Economic
Cooperation and Development markets.
·
EQT Fund VI
($450 million), a Swedish infrastructure fund that makes private investments
with a focus on decarbonization, resource efficiency, and pollution control.
·
Fundamental
Empire Fund ($375 million), a North American fund that opportunistically makes
investments in affordable and workforce housing, renewable energy,
infrastructure, and municipal assets.
In 2019, DiNapoli
released a Climate Action Plan, a multi-faceted strategy to invest in
sustainable companies, pursue climate solution investments, and apply minimum
standards to inform engagements and potential divestment decisions. Each year
since, DiNapoli has issued a progress report on the plan.
The New York
State Common Retirement Fund is one of the largest public pension funds in the
Report:
Progress Report on the New York State Common Retirement
Fund’s Climate Action Plan