New York City Mayor Bill de Blasio, Comptroller Scott M. Stringer and other trustees of the city’s $189 billion pension funds announced a goal to divest city funds from fossil fuel reserve owners within five years, which would make New York City the first major U.S. pension plan to do so. The Mayor and Comptroller will submit a joint resolution to pension fund trustees to begin analyzing ways to divest from fossil fuel owners in a responsible way that is fully consistent with fiduciary obligations, according to a statement issued Jan. 10 by the Mayor’s office. Here is more from the statement, edited for clarity and space:
In total, the city’s five pension funds hold roughly $5 billion in the securities of over 190 fossil fuel companies. The city’s move is among the most significant divestment efforts in the world to date.
“New York City is standing up for future generations by becoming the first major U.S. city to divest our pension funds from fossil fuels,” said Mayor de Blasio. “At the same time, we’re bringing the fight against climate change straight to the fossil fuel companies that knew about its effects and intentionally misled the public to protect their profits. As climate change continues to worsen, it’s up to the fossil fuel companies whose greed put us in this position to shoulder the cost of making New York safer and more resilient.”
“This is a first-in-the-nation step to protect our future and our planet – for this generation and the next. Safeguarding the retirement of our city’s police officers, teachers, firefighters and city workers is our top priority, and we believe that their financial future is linked to the sustainability of the planet. Our announcement sends a message to the world that a brighter economy rests on being green,” Comptroller Stringer said. “It’s complex, it will take time, and there are going to be many steps. But we’re breaking new ground, and we are committed to forging a path forward while remaining laser-focused on our role as fiduciaries to the Systems and beneficiaries we serve.”
The Mayor also announced that the city has filed a lawsuit against the five largest investor-owned fossil fuel companies as measured by their contributions to global warming. The city will be seeking damages from BP, Chevron, ConocoPhillips, Exxon Mobil, and Royal Dutch Shell for the billions of dollars the city will spend to protect New Yorkers from the effects of climate change. This includes damages to pay for harm that we’ve already seen and damages that are necessary to address harm we expect to happen over the course of this century.
New York City’s lawsuit seeks to recover the billions needed to fund climate change resiliency measures that the city needs to implement to protect the city, its property, and its residents from the ongoing and increasingly severe impacts of climate change. This includes physical infrastructure, like coastal protections, upgraded water and sewer infrastructure, and heat mitigation, but also public health campaigns, for example to help protect residents from the effects of extreme heat. To recover from past harm and prepare for future events, New York City is already executing an over $20 billion resiliency program to protect New Yorkers and build resilience against rising seas, more powerful storms, and hotter temperatures.
Recently uncovered documents make it clear that the fossil fuel industry was 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 at least the 1980s. Nonetheless, they deliberately engaged in a campaign of deception and denial about global warming and its impacts, even while profiting from the sale of fossil fuels and protecting their own assets from the effects of rising seas and a changing climate. More than half of the greenhouse gas pollution from the fossil fuel industry has occurred since 1988, according to a recent analysis. Sea levels have risen about one foot since 1900 with much of that rise due to climate change, the most powerful storms are becoming more frequent, and flooding is becoming more frequent and intense.
Climate change is perhaps the toughest challenge New York City will face in the coming decades. Sandy taught us how destructive weather events exacerbated by climate change can be. Rising sea levels, increasing temperatures and precipitation, and the likelihood of more frequent and intense flooding threaten our neighborhoods and infrastructure while exacerbating many underlying social inequities. To adapt to these threats, the city is implementing an over $20 billion program to ensure our neighborhoods, economy, and public services will be ready to withstand and emerge stronger from the impacts of climate change. These investments are known to be just the first step in making the city prepared for the impacts of climate change, and more will continue to be needed over the course of the century. The city’s resiliency programs and projects are a shift in the way we live now and how we must develop and implement tools that will make our city more resilient against future risks.
The first step is for the trustees at each fund to instruct the Office of the city Comptroller’s Bureau of Asset Management (BAM) to commission an analysis of the proposed divestment and advise the trustees as to the anticipated impact on the risk and return characteristics of the portfolio. The trustees will also seek legal opinion as to whether carrying out the divestment would be consistent with trustees’ fiduciary duties to beneficiaries. Assuming a positive legal opinion, the trustees would then instruct BAM to carry out the divestment with specified steps and timelines. In the case of this divestment, transactions would likely be carried out in stages in order to reduce transaction and implementation costs.
PICTURED: New York City Mayor Bill de Blasio, center, announces the city’s divestment plan and a lawsuit against big oil companies.
Statement and photo from: The Official Website of The City of New York; http://www1.nyc.gov/office-of-the-mayor/news.page