Across industries, net zero targets are largely falling out of fashion. Whether as a response to unfavourable political dynamics or as a strategic rethink, a slew of organizations are rebranding climate goals, softening commitments or letting targets quietly slip. But New York City’s public pension funds organizations aren’t retreating from sustainability targets – instead, they’re doubling down.
On April 22nd, NYC Comptroller Brad Lander issued a clear ultimatum to asset managers: deliver credible, actionable climate transition plans aligned with net zero by June 30th, or risk losing access to billions in pension fund mandates. As custodian of nearly $284 billion across five pension funds, Lander has significant leverage. So far, the response has been positive: the NYC Employees’ Retirement System, the Teachers’ Retirement System and the Board of Education Retirement System have all already signalled their readiness to back this stronger climate stance. This includes commitments to evaluating managers based on Scope 3 emissions and broader portfolio alignment, not just on isolated fund performance.
Why are NYC’s pension funds swimming against the net zero rollback tide? Because pension funds operate fundamentally differently to corporate firms. While businesses struggle to translate ambition into measurable impact and to demonstrate clear financial benefits from their sustainability strategies in the short term, pension funds can take a longer view. They’re designed to think across decades, not quarters, making sustainability an essential part of their investment strategy. Managing long-term assets means preparing for risks like climate change, stranded assets and the volatility of the energy transition, issues that are already material and will only intensify over time. Thus, New York City's pension funds are pushing harder for climate action, even as others retreat.
While it remains to be seen whether this move will pay off, history demonstrates that this kind of patient, long-term thinking is likely to be rewarded. After the dot-com crash, for example, many investors abandoned tech entirely. But pension funds that stayed committed to fundamentally strong organizations, like Microsoft and Apple, were ultimately rewarded with high returns. So while sustainability may seem out of favour in the current political climate, organizations should take a longer view. Underlying market fundamentals – the accelerating energy transition, regulation and rising physical risks – point clearly toward a lower-carbon future. Organizations that fail to prepare for this transformation risk falling behind.
