As Comptroller of New York City, my job is to administer government spending and oversee the financial health of the city now and into the future. As the climate crisis and other urgent sustainability risks threaten our economy and our environment, it is my fiduciary duty to ensure that we are evaluating all material, financial risks to our portfolios and opportunities to ensure that our pensions and other investments are solid now and for years to come.
But recently, there are special interests who are trying to get comptrollers like me and other fund managers to ignore these risks, using misinformation to convince people that sustainable investment strategies are politically motivated, and therefore, should not be allowed to factor such risks into decision-making.
The Myths Behind Sustainable Investing
I wanted to take a moment, as an elected representative, to address some of these myths in the Q&A below.
Do sustainable investing practices have a negative effect on financial performance? Do portfolios that consider climate change and other sustainability risks perform worse than traditional portfolios?
“Responsible fiduciary investing requires an assessment of all systemic risks that may negatively impact returns over the long-term. The climate crisis is one of the biggest systemic risks facing our portfolio over the coming years, as seas rise, damage from higher-intensity storms increases, and companies work to keep up with changing regulations.
Considering these factors is a critical part of preserving the value of an investment portfolio. But it’s not all about risk: climate solutions investments in things like renewable energy, energy efficiency, pollution prevention, and low-carbon building technologies present big opportunities to do well by doing good.”
Aren’t sustainable investment strategies threatening to eliminate certain sectors of the economy altogether (e.g. the oil and gas industry)?
“The goal of sustainable investment strategies is to achieve strong financial returns over the long-term — that includes mitigating risks like stranded fossil fuel assets as the world undergoes a transition to renewable sources. The energy transition is here, and investors can succeed by investing in companies that are capitalizing on that transition now.”
Isn’t sustainable investing just a trend?
“A first-year teacher signing up for their pension today wants to know that their retirement security will be there for them 30 years from now. They also probably want to be sure their city won’t be underwater by then!
As long-term investors, we have to think about how our investments mitigate financial risks that climate change poses to our portfolios, to the broader economy, and to our communities not just tomorrow, but in the decades to come.”
Momentum is on our side.
I recently signed a statement with more than 300 investors and companies to send a clear, unified message to policymakers to protect the freedom to invest responsibly. If you are an investor or company, I encourage you to visit www.freedomtoinvest.org and consider signing on.
We all have to speak up and stand up. We all have a stake in this work, because we all have a stake in the future of our economy and our planet.
Brad Lander is the Comptroller of New York City.
