In 2020, the New York State Common Retirement Fund (Fund), announced a goal of achieving net zero greenhouse gas (GHG) emissions for the Fund’s portfolio by 2040. The goal builds on the Fund’s Climate Action Plan 2019. A key component of this initiative is a four year review of investments in energy sector companies, using minimum standards to assess transition readiness and climate-related investment risk, and, where consistent with fiduciary duty, potential divestment of companies that fail to meet minimum standards.
Along with reviewing investments in energy sector companies, we believe engaging with the Fund’s portfolio companies is a critical component of achieving net-zero emissions. As a result, the Fund has developed a systematic shareholder engagement program to address climate change risk that prioritizes companies for engagement, sets specific timeframes, uses transition-readiness and resiliency metrics to define goals, and measures progress against these goals.
The Fund undertakes engagements with companies in high-impact sectors, directly and in collaboration with other investors through initiatives such as Climate Action 100+, the Ceres Investor Network on Climate Risk, and the CDP non-disclosure campaign, among others. The Fund also conducts direct engagements through letter writing and meetings with management and board directors. The Fund also files shareholder resolutions to raise the issue directly with other shareholders.
Since 2008, the Fund has filed over 150 climate-change-related shareholder resolutions, reaching 72 agreements with portfolio companies on climate issues such as setting GHG emissions reduction targets and renewable energy and energy efficiency goals, and enhanced climate disclosures in line with the Task Force on Climate-related Financial Disclosures.
In recent years, the Fund has engaged its portfolio companies on renewable energy and energy efficiency goals. Investments in clean energy resources — including renewable energy like wind and solar, and energy efficiency — can provide companies a cost-effective way to reduce GHG emissions and insulate themselves from climate risks. As a result of the Fund’s engagements a number of corporations have set clean energy or emissions reduction goals to drive their decision-making and performance.
Examples of these positive outcomes include:
Keurig Dr. Pepper committed to adopting science-based targets and reach 100% renewable electricity;
Lowe's went from having no sustainability program to setting a GHG goal for their scope 1&2 emissions and made the Renewable Energy Buyers Alliance (REBA) top-10 list this year for their renewable energy deals;
Michael Kors (now Capri), which, after three years of engagement dialogues, committed to be 100% carbon neutral and to use 100% renewable electricity in direct operations in 2020 and is cooperating through the Sustainable Apparel Coalition to improve energy efficiency and increase renewable energy use in the supply chain; and,
American Electric Power, one of the nation's highest-carbon emitting electric utilities, announced its goal to achieve zero emissions by 2050.
In 2021, the Fund has filed six shareholder proposals at companies requesting that they set targets for increased use of renewable energy and enhanced energy efficiency of their facilities. Since those filings, the Fund has received an agreement with Cleveland-Cliffs Inc., a steel manufacturer, which has adopted GHG targets and committed to co-funding green hydrogen project to decarbonize its steel manufacturing.
Thomas P. DiNapoli
New York State Comptroller, Trustee of the New York State Common Retirement Fund