New York State's Andrew Siwo emphasizes that investment results serve as the primary measure of their achievement

The New York State Retirement Fund, managing the savings of over a million New Yorkers with a staggering $267.7 billion in assets, is leading the charge in the energy transition. The fund, which has been increasingly focusing on climate issues, has announced significant investments in private markets related to the energy transition.

In recent years, the fund has invested approximately £4 billion in private market investments, a move that aligns with the Inflation Reduction Act's incentives for investments in energy transition assets in private markets. However, it is still early days, and the benefits of these investments will become clearer as they mature.

The fund's strategy hasn't fundamentally changed. It continues to balance engagement and divestment, a strategy that Siwo, the fund's director, emphasises is both an art and a science. The fund uses engagement and advocacy as complementary tools to protect retirement assets.

The New York State Retirement Fund has reduced its positions in fossil fuel shares, divesting $26.8 million from eight fossil fuel firms. However, it hasn't completely turned its back on fossil fuels. The fund has partially divested from Exxon Mobil but continues to hold companies that meet its minimum standards.

The fund's equity holdings are tilted towards climate-friendly indices. It uses the MSCI Climate Index Ex US and the FTSE Russell Transition Pathway Index, among others, to guide its investments. Some 40% of the fund's overall portfolio is invested in listed equities.

The fund's SICS programme, which focuses on sustainable infrastructure and renewables, has seen a boost. This summer, the fund doubled its investments to $40 billion. The second biggest position in the SICS programme are real assets such as sustainable infrastructure and renewables.

However, the fund's commitment to the green transition hasn't been without controversy. A court case earlier this year accused three New York City Systems of breaching their fiduciary duty by prioritising social and environmental goals over financial returns. The New York State Retirement Fund, however, continues to place significant investments in private markets.

In conclusion, the New York State Retirement Fund is at the forefront of the green transition, balancing its investments between engagement and divestment, and using a variety of climate-tilted indices to guide its equity holdings. Despite some controversy, the fund remains committed to its strategy, investing in the energy transition and protecting the retirement savings of its millions of beneficiaries.