The New York State Common Retirement Fund (NYSCRF), one of the largest public pension plans in the US, recently made two major sustainability announcements. First, the fund has committed a substantial $2.4 billion allocation to its Sustainable Investments and Climate Solutions (SICS) program through three climate-focused investment funds. Second, the NYSCRF completed its annual review of thermal coal, oil sands, shale oil and gas, and integrated oil companies. This review resulted in new restrictions on investment in eight coal and shale oil and gas companies that were considered unprepared for the low-carbon economy transition, while simultaneously removing 11 companies from the restricted list.
NYSCRF’s Ambitious Climate Investment Strategy
Overseen by State Comptroller Thomas DiNapoli, the NYSCRF has set an ambitious goal: allocating $40 billion to sustainable investments and climate solutions by 2035. This builds upon its initial $20 billion goal, which was surpassed in 2024. The fund actively deploys capital into various climate-focused investments across asset classes, including public equity, fixed income, and private equity. Recent commitments include significant investments in climate transition indices, renewable energy infrastructure, and funds focused on climate mitigation and adaptation across sectors like energy, transportation, and agriculture.
The fund has set a goal of net zero portfolio emissions by 2040, supported by a Climate Action Plan introduced in 2019 that sets minimum standards for companies to demonstrate their readiness for a low-carbon transition.
New York City Pension Funds: A Blueprint for Bold Climate Action
Under the guidance of Comptroller Brad Lander, the New York City pension funds, including the New York City Employees’ Retirement System (NYCERS), Teachers’ Retirement System (TRS), and Board of Education Retirement System (BERS), have also taken a strong stance on climate change, establishing an ambitious 2040 net zero target for their portfolios.
Additional steps include:
- Demanding action from asset managers: By requiring robust net zero plans that are aligned with the city’s climate goals by June 30, 2025, and threatening mandate loss for noncompliant managers, the NYC pension funds are driving a systemic shift in the financial industry.
- Real economy decarbonization: Engagement with portfolio companies to measure and report Scope 1, 2, and 3 emissions, establish net zero plans, and align capital expenditures and lobbying with climate targets, demonstrates a commitment to real decarbonization outcomes and responsible financial strategies.
- Fossil fuel divestment and exclusion: Beyond divesting from fossil fuel reserve owners, the exclusion of future private equity and infrastructure investments in midstream and downstream fossil fuel infrastructure signifies a forward-looking approach to mitigating climate-related financial risks and promoting ethical investing.
- Exceeding targets: As of early 2025, the NYC pension funds announced they had surpassed their interim net zero emission reduction targets for 2025, having reduced financed greenhouse gas (GHG) emissions by 37% between 2019 and 2024. This showcases their commitment to climate action and sustainable portfolio management.
At both the state and city levels, New York’s pension plans are prominent leaders in integrating sustainability and climate considerations into their investment strategies. They recognize that climate change poses significant financial risks and opportunities for long-term returns, consistent with their fiduciary duty to beneficiaries.
Key Climate-Focused Investment Commitments
New investment commitments include a $2 billion allocation to the FTSE Russell TPI 1000 Climate Transition Index. Developed by FTSE Russell, this index reflects the performance of global and diversified indices while weighing constituents to account for the risks and opportunities associated with the transition to a low-carbon economy. Constituents within this index series undergo assessments based on various climate considerations, including exposure to green revenues, fossil fuel reserves, operational carbon emissions, climate governance activities, and forward-looking commitments to carbon emission pathways. The New York pension fund previously allocated $2 billion to this specific index fund in 2021, demonstrating a continued focus on climate-aligned investments.
Additional commitments highlight their diverse approach:
- $250 million to the Oaktree Power Opportunities Fund VII: This fund targets investments supporting critical infrastructure, including electric power, solar, and water systems, aligning with renewable energy investments and sustainable infrastructure development.
- $150 million to the Vision Ridge Partners Sustainable Asset Fund IV: This entity primarily focuses on climate mitigation and adaptation through investments aimed at identifying, developing, and transforming assets across the energy, transportation, and agriculture sectors, predominantly within North America. This represents a commitment to impact investing for a sustainable future.
Other State Pension Funds Addressing Climate Change
New York is not alone; US state pension funds are increasingly addressing climate change through various strategies, showcasing a broader trend in sustainable investing.
- California Public Employees’ Retirement System (CalPERS): The largest public pension fund in the US, CalPERS has a $100 billion investment target by 2030 for climate solutions, focusing on mitigation (renewable energy, carbon capture), adaptation (water management, disaster risk reduction), and transition (“brown-to-green” strategies). This demonstrates a significant commitment to green investments.
- California State Teachers’ Retirement System (CalSTRS): CalSTRS is working toward a 1% target allocation to private investments in climate and low-carbon projects by 2026 as part of its broader Sustainable Investment and Stewardship Strategies program, emphasizing low-carbon investments.
- Oregon Public Employees Retirement System (OPERS): OPERS has proposed a significant allocation to “climate positive” and “climate solutions” investments, indicating a growing focus on environmentally responsible investments.
- Maine Public Employees Retirement System (MainePERS): Maine was the first state to enact legislation requiring its state agencies to divest from all fossil fuel holdings by 2026. However, MainePERS has expressed concerns about the financial implications of a full divestment, highlighting the complexities of fossil fuel divestment policies.
Conclusion: Leading the Way in Sustainable Finance
The aggressive climate actions taken by New York’s state and city pension funds, alongside the substantial commitments from California’s CalPERS and CalSTRS, send a strong message: integrating climate strategy is no longer optional for responsible financial stewardship. These leading funds are proving that safeguarding long-term returns for beneficiaries demands proactive investment in sustainable solutions, strategic divestment from high-risk fossil assets, and forceful engagement with corporations. Their initiatives represent a significant step in sustainable finance and achieving net zero emissions within investment portfolios.
