By Ross Kerber
(Reuters) -New York City Comptroller Brad Lander is urging city pension fund officials to rebid $42.3 billion managed by BlackRock over climate concerns, the first major move by a Democrat to counter pressure on financial companies from Republican allies of the fossil-fuel industry.
Lander’s term in office ends on December 31, but his recommendation, to be unveiled on Wednesday, will put Mayor-elect Zohran Mamdani in the hot seat when he takes office in about five weeks. Mamdani’s appointees will take key positions that hold some sway over the pension boards that decide where to invest retirement funds for some 800,000 current and former city employees.
In a November 25 memo to other pension fund trustees, seen by Reuters, Lander urged the funds to re-evaluate contracts with New York-based BlackRock, which is both the world’s largest asset manager and the city’s largest manager of retirement assets.
Lander cited what he called “BlackRock’s restrictive approach to engagement” with about 2,800 U.S. companies in which it owns more than 5% of shares.
‘ABDICATION OF FINANCIAL DUTY’
Under pressure from the Trump administration, BlackRock in February said it would not use its discussions with executives to try to control companies. That ran contrary to the hopes of Lander and other environmentally minded investors, who wanted the investors to press executives on priorities like disclosing emissions.
In an interview, Lander said the change was “an abdication of financial duty and renders them unable to meet our expectations for responsible investing.”
His recommendation must still be approved by pension boards that traditionally take cues from the comptroller’s office. Representatives for Mamdani and for New York’s incoming Comptroller, Mark Levine, did not respond to questions on Tuesday.
Lander, a rival-turned-ally of Mamdani during the mayoral campaign, recommended that the pension plans keep BlackRock to manage non-U.S. equity index mandates and other products. Lander also recommended the three systems continue using State Street to manage $8 billion in equity index assets, and that they drop deals with Fidelity Investments and PanAgora, which he said also do not press companies sufficiently on environmental matters like decarbonization.
PRESSURE FROM WASHINGTON
A number of Republicans, some from fossil-fuel-producing states, have withdrawn money from BlackRock and other money managers, accusing them of basing investment decisions on social or environmental issues. New York City funds would be the first large Democratic or liberal-leaning asset owner to respond in kind.
Environmental activists also want Lander and other public officials to take a harder line by backing more shareholder resolutions that push corporate boards to embrace policies that combat climate change.
Speaking before Lander’s decision was announced, Richard Brooks, climate finance program director for the advocacy group Stand.earth, said dropping major asset managers “will be one of the first tests of the climate credentials of the incoming mayor and comptroller. I hope they will recognize the importance and lead on getting these recommendations passed.”
(Reporting by Ross Kerber; Editing by Dawn Kopecki and Thomas Derpinghaus)
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