Brad Lander is New York City’s comptroller, which is to say that, among other tasks, he is responsible for overseeing the city’s pension funds. So this report from the Financial Times should make disturbing reading either for the city’s pensioners or, to the extent that they underwrite the city’s pension obligations, its taxpayers.
The FT:
On Wednesday Lander said BlackRock and two other asset managers, Fidelity and PanAgora, had failed “to address climate risk with the seriousness we expect” as he recommended the pension funds begin reviewing new financial advisers to manage their stock portfolios.
The job of pension fund managers is to generate the maximum (risk-adjusted) return on the money entrusted to them. Given the typical holding period of an investment, the amount of actual climate risk to be factored into such investments is minimal (although it will also be necessary to consider lawfare and regulatory and legislative risks).
The FT:
Lander said BlackRock was “unable” to meet several of the pension systems’ climate expectations, including encouraging portfolio companies to take “concrete” actions, such as setting net zero goals and adopting clear transition plans.
The chances that net zero — as currently imagined a largely pointless and value-destructive exercise — will be realized by the Paris target date of 2050 or at any point near then is, well, less than zero. For companies to set net zero goals would be, in the absence of any legal obligation to do so, an exercise in irresponsibility.
And the idea that there is some energy “transition” sweeping all before it is looking ever less tenable (check out the way that estimates for peak oil consumption have been changing). Companies should adopt “transition” plans that make sense for them economically, and (in, again, the absence of any legally enforceable obligation to do so) otherwise give them a miss.
Then again, Lander, after some twists and turns, felt comfortable campaigning for Zohran Mamdani for New York City’s mayor, someone whose thinking is saturated in economic illiteracy and a profound contempt for property rights. Apparently, Lander is contemplating a run for Congress. Under the circumstances, he’s more suited to a job there than as comptroller.
To its credit, BlackRock is punching back. The FT’s report includes comments from Armando Senra, who runs the firm’s institutional business in the Americas:
“You accused BlackRock of abdicating its financial duty and putting New York City’s pensions at risk,” Senra said. “These statements are another instance of the politicization of public pension funds, which undermines the retirement security of hardworking New Yorkers.”
Quite.