New York City public pension funds sued for selling fossil fuel assets

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May 12, 2023
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NEW YORK CITY, NY – According to a report by Bloomberg, public employees have sued three New York City pension funds for allegedly breaching their fiduciary responsibility by selling billions of dollars’ worth of fossil fuel assets. The lawsuit represents another challenge to Environmental, Social and Governance (ESG) investing.

In their complaint filed in the New York State Supreme Court, the plaintiffs argue that the pension funds’ decision to divest approximately $4 billion in oil and gas holdings to combat climate change is misguided and ineffective. The plaintiffs contend that the pension funds must exercise prudence in making investment decisions. ESG, also referred to as “stakeholder capitalism,” prioritizes green investment strategies that advance climate-focused initiatives like achieving net-zero emissions.

The New York State Supreme Court, the plaintiffs allege the pension funds’ choice to sell about $4 billion in oil and gas holdings to take on climate change is “misguided and ineffectual” and they need “to act prudently in making investment decisions,” according to Bloomberg. ESG, also known as “stakeholder capitalism,” places an emphasis on green investing strategies that further climate-focused efforts, such as net-zero emissions.

New york city public pension funds sued for selling fossil fuel assets

The plaintiffs include a subway train operator, a teacher and an occupational therapist, according to Bloomberg. They are suing the New York City Employees’ Retirement System, the Teachers’ Retirement System and the Board of Education Retirement System.

Eugene Scalia, a former labor secretary under former President Donald Trump, is representing the plaintiffs, the outlet reported.

The three funds breached their fiduciary responsibility when they chose to sell the holdings to “advance environmental goals unrelated to the financial health of the plans,” the suit alleges, according to Bloomberg. The funds made the decision to divest without taking into account whether it would lead to better financial returns.

New York City Comptroller Brad Lander, who manages pension-fund assets for public employees, has threatened to pull billions of dollars from asset managers that refused to back his climate investing practices. Numerous Republican attorneys general have pushed back against ESG initiatives spearheaded by firms like Blackrock, claiming the asset-management giant isn’t actually working to make money on behalf of pensioners.

“Defendants’ actions in selling off high-performing securities, and prioritizing lower-yield investments, is especially troubling given the plans’ chronic and severe underfunding,” the suit claims, according to Bloomberg.

“While we don’t comment on pending litigation, we take our fiduciary duty very seriously,” a spokesperson from Lander’s office told Bloomberg. The spokesperson cited “the financial risks of investing in fossil-fuel reserves,” and said the decision to divest safeguards beneficiaries.

Lander did not immediately respond to the Daily Caller News Foundation’s request for comment.

NYC Pension Funds Sued For Divesting From Oil And Gas

Jason Cohen on May 12, 2023

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