Enhanced commitment by New York pension fund, as they increase financial backing towards a stock index focusing on companies with strong climate change strategies.

The New York State Common Retirement Fund, managing over $267.7 billion, continues to prioritise climate-oriented investments, aiming for long-term financial success while addressing the urgent risks posed by climate change.

In a significant move, the fund has committed an additional $2 billion to the MSCI World ex-USA Climate Change Index strategy, following an initial allocation of $1 billion made in March 2023. The MSCI mandate aims to address climate-related risks by increasing the weighting of companies that engage in climate solutions and decreasing the weighting of companies that face greater climate transition risks.

The fund has also made a commitment of $200 million to Carlyle Renewable and Sustainable Energy Fund II, and $375 million to Fundamental Empire Fund. Furthermore, it has deployed $450 million to EQT Fund VI.

In a series of climate-related agreements during the 2024 proxy season, the fund reached accords with five portfolio companies, though details about these companies remain undisclosed.

Elsewhere, Southwest Airlines and steel-maker Cleveland-Cliffs have agreed to set greenhouse gas emissions reduction targets and publicly disclose their climate transition action plans. Realty Income has also agreed to adopt and publish a low-carbon transition plan.

McDonald's, on the other hand, has pledged to assess supply chain water-related business risks and set water quality and quantity targets. WEC Energy Group has committed to publicly disclose a feasibility study on integrating climate metrics into its executive compensation plan.

The New York pension fund's total deployment to its Sustainable Investments and Climate Solutions program now exceeds $22 billion. These investments reflect the fund's commitment to fostering a more sustainable future for its beneficiaries.

The fund's focus on climate-oriented investments underscores its belief that climate change poses an increasingly urgent risk to all investors. As such, the fund is actively working to mitigate these risks and capitalise on opportunities presented by the transition to a low-carbon economy.

The MSCI mandate, for instance, aims to reduce its overall scope 1, 2, and 3 greenhouse gas emissions intensity by a minimum of 30% relative to its benchmark. This strategy aligns with the fund's broader goal of reducing the carbon footprint of its portfolio.

In conclusion, the New York State Common Retirement Fund's continued commitment to climate-focused investments underscores its dedication to fostering long-term financial success while addressing the climate-oriented investment challenges faced by its portfolio. The fund's actions serve as a model for other pension funds and institutional investors seeking to navigate the complexities of the transition to a low-carbon economy.