first_imgQ&A with NY State Comptroller: How Investors Can Manage Climate Risk Now FacebookTwitterLinkedInEmailPrint分享 is NYS Common Retirement Fund addressing climate risks?Thomas DiNapoli: Addressing climate risk is my fiduciary duty as trustee of the New York State Common Retirement Fund. Climate change is an unprecedented, material risk that affects our portfolio across virtually all asset classes, yet there is little disclosure. We want to know that the companies we invest in and the managers we hire are addressing long-term risks, including climate change. Our large size and diversified holdings means that the Fund has direct and indirect exposure to systemic risks that climate change may cause, so we are active on the public policy front as well.Why did you decide to make a stand about Exxon and climate risks?DiNapoli: Exxon is America’s largest domestic oil producer and one of our largest holdings. We were not satisfied with the company’s reassurances that it was addressing climate risk.How significant was it that the SEC sided in your favour over Exxon?DiNapoli: It was very significant. It allowed us to move forward with our request. That said, even if the SEC had upheld Exxon’s no-action request, we would not have gone away. We would have reconfigured our request and come back the next year.Will NYS Common Retirement Fund be turning its attention to other companies/sectors next?DiNapoli: In 2017, we expanded our shareholder proposal programme on two-degree scenario analysis with utility companies, which is a demand-side approach in the energy value chain. Climate risk remains one of our priorities, along with board accountability and diversity, disclosure of corporate political spending, excessive executive compensation, international labour standards and equal rights in the workplace. We may also be looking at some new issues for next season.Some investors argue that fiduciary duty prevents them from making low-carbon investments? Was this a problematic area for you or did your interpretation of fiduciary duty compel you to make low-carbon investments?DiNapoli: It’s inevitable that the future global economy is a lower carbon economy. Climate risk and the global effort to mitigate climate change present a wealth of opportunities in alternative energies, new technologies, infrastructure and other areas. It was essential thatthe Fund move towards climate aware investing. We believe our fiduciary duty requires our investment staff and myself to seek out sustainable investments that meet our standards of risk and return.Have any of the actions you have taken with regards to climate proved controversial with any stakeholders at NYS Common Retirement Fund? If so, were you able to win them over?DiNapoli: I think our stakeholders have been very pleased with our efforts and, in particular, with our performance and investment returns.How has the low-carbon index announced at Paris climate summit performed?DiNapoli: It’s performed as we expected, closely tracking the Russell 1000 index.It was created to replicate the returns of the index with a very low tracking error and it has succeeded. It has proven to be a cost-effective and efficient way to lower the carbon footprint of our portfolio and we believe it has inspired other investors to seek out ways to invest that help promote a lower carbon economy.Do you have any plans to increase the allocation to the index, or scale up climate-related investments in any other way?DiNapoli: It is a scaleable strategy and we expect that in the near term we will be able to announce an increased investment to the low emissions index. We’re not there yet, but we are close.Do you have any other low-carbon/sustainable investments/activities?DiNapoli: We have more than $5 billion committed to sustainable investments, including the $2 billion low-carbon index and an additional $1.5 billion in our Sustainable Investment Programme (SIP). The Fund recently made its first SIP investment – the Avanath Affordable Housing Fund, which invests exclusively in multifamily properties in markets where renters have high cost burdens.Avanath is one of the rare real estate investment managers whose primary strategy focuses on environmental, social and governance (ESG). Among other things, Avanath considers use of energy-efficient appliances and installation of solar panels at its properties as an investment performance driver.What else can NYS Common Retirement Fund do to drive the agenda of addressing climate risks and opportunities?DiNapoli: We will continue to speak up and ask our portfolio companies what they are doing to protect themselves and their investors. The Fund, with other investors, will continue to seek a regulatory environment that will lead the Fund and the planet to a more sustainable future.We frequently weigh in with a wide range of policymakers on disclosure and climate mitigation issues. I serve on the board of Ceres. The Fund is a founding member of the Principles for Responsible Investment, a member of the Portfolio Decarbonisation Coalition and member of CDP, among other groups. We will continue to allocate our capital to sustainable strategies.More: Q&A with Thomas DiNapolilast_img read more