Dear NYCERS, BERS and TERS Trustees,

As New Yorkers, we are writing to urge you to maintain New York’s position as a leader in managing climate-related financial risk by approving Comptroller Lander’s recommendation that the contracts of BlackRock, Fidelity and PanAgora be put out to bid.

Climate-driven extreme weather events, including heat waves, droughts, floods, hurricanes, and wildfires are already straining economic systems around the world.

According to one peer-reviewed analysis, the climate crisis inflicted a global economic toll of $16 million an hour in extreme weather damages between 2000 and 2019. Here in New York City, the economic toll that could be directly attributed to climate change of Superstorm Sandy was more than $8 billion.

Meanwhile, according to research from SEO Amsterdam Economics, over 1/3rd of all extreme weather-related insured losses over the last two decades – totaling $600 billion – can be directly attributed to climate change, meaning that the insurance industry is already paying out more than $30 billion every year as a result of global heating.

This is resulting in insurance companies hiking rates and abandoning communities, including here in New York City.

Between 2019 and 2023, the average insurance cost per affordable unit jumped 103% from $869 to $1,770 in New York City, and nearly 1 in 5 affordable housing developers say they’ve had to pause projects due to insurance challenges. The climate-driven insurability crisis is already impacting everyday New Yorkers, and this is just one example of how failing to address the climate crisis negatively impacts the broader economy.

Given this, it’s no surprise that, in 2023, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, issued a major report, Principles for Climate-Related Financial Risk for Large Financial Institutions, which concluded that: “The financial impacts that result from the economic effects of climate change and the transition to a lower carbon economy pose an emerging risk to the safety and soundness of financial institutions and the financial stability of the United States.”

While the US federal government has retreated from addressing climate risk since President Trump took office, regulators elsewhere continue to view climate-related financial risk as a grave threat to financial stability. The European Central Bank views managing climate risk as a top priority; while, the Basel Committee on Banking Supervision has published guidelines for jurisdictions to disclose climate-related financial risks.

As long-term investment fiduciaries, pension plans are among the financial institutions that should be most alarmed about medium- and long-term risks that climate change poses to portfolio performance.

In the face of these stark realities, the three New York pension pension funds, NYCERS, TERS, and BERS, deserve significant credit for the steps taken in recent years to manage economy-wide climate-related financial risk, including completing divestment from upstream oil and gas companies; achieving a 37% weighted average reduction in Scope 1 and 2 greenhouse gas emissions between 2019 and 2023; surpassing targets for investments in renewable energy and climate solutions one year ahead of schedule; and implementing Net Zero by 2040 goals and plans.

At your upcoming meetings, you can maintain New York’s position as a leader in managing climate-related financial risk by approving Comptroller Lander’s recommendation that the contracts of BlackRock, Fidelity and PanAgora be put out to bid for failing to meet the funds’ expectations of managing climate risk. As detailed at length in Comptroller Lander’s recommendations to the board, these three companies have failed to meet the standards set by your fund’s Net Zero by 2040 plans. In particular, as the pension funds’ largest manager, it is critical that BlackRock’s mandate is put out to bid.

As Comptroller Lander writes: “BlackRock is unable to meet several of the Systems’ climate expectations regarding engagement, including encouraging portfolio companies to take concrete climate actions such as setting net zero goals and science-based targets, adopting clear transition plans, and aligning capital expenditures and lobbying activity with companies’ climate goals and targets.”

The fact that BlackRock manages such a large amount of the three funds’ portfolios means that unless you commit to working with a manager that takes climate risk more seriously, you will be unlikely to achieve your goals outlined in the Net Zero by 2040 plan.

As New Yorkers, we urge you to implement Comptroller Lander’s recommendations at your upcoming board meetings in December. Sincerely