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Dear New Yorkers,
One of the most important duties of the New York City Comptroller is to steward the pension fund investments that represent the retirement security of over 750,000 current and retired teachers, firefighters, police officers, social workers, crossing guards, secretaries, and other public sector workers.
These investments are how we meet our obligations to the people who’ve taught our kids, kept us safe, and taken care of our parks and streets and families. And they’re part of a social compact between generations that supports a robust public realm as a key to building our future. When these investments earn strong returns, it means the City then needs to deposit less money into the funds, leaving more to spend on affordable housing, child care, education, and other critical needs we face.
That’s why I’m pleased to report that for the fiscal year that ended June 30, 2023, NYC’s pension funds saw returns of 8.0%, exceeding our 7% target rate. While returns can fluctuate sharply from year to year and are often subject to the whims of the market – FY21 was one of the best years ever for the stock market, FY22 one of the worst – our longer-term trends are strong, with a 7.9% annualized rate-of-return over the past 7 years. Our Spotlight this month goes into detail on the FY23 returns and the pension funds’ asset mix across public and private markets (where we’ve worked hard to increase transparency in recent years).
Our funds’ strong long-term economic performance provides validation of our approach to responsible fiduciary investing, which takes into account the environmental, social, and governance (sometimes called “ESG”) risks facing our portfolio. Some right-wing politicians are now waging a “war on ESG” at the behest of their fossil fuel donors, the latest in their string of phony-populist culture wars. But taking risks like climate change (have you noticed it’s the hottest summer in human history?), inequality, or insider trading into account is not only consistent with fiduciary duty: it’s just plain common sense.
Sometimes those risks can be addressed at the level of an individual company; that’s why I called out BlackRock for appointing the head of Saudi Aramco, the world’s largest oil and gas company, to their board last month. But many of the risks we face are systemic – so they can’t be “due-diligenced” or diversified away. That’s why we’re proud that the Teachers, NYCERS, and BERS funds have adopted Net Zero Implementation Plans which are the boldest of any large U.S. public pension fund. Those plans set a framework through which we expect all of our asset managers and portfolio companies to set science-based targets for decarbonization that are consistent with preserving the value of our investments (and the planet that every one of them is located on).
During this spring’s proxy season, we also focused on workers’ freedom of association to organize a union and bargain collectively. We won a resounding win at Starbucks, where 52% of investors voted in favor of our resolution, calling for the company to conduct an independent, third-party assessment of their labor practices. We believe that respecting workers’ rights to organize, and taking a broader “good jobs” approach, is key to the long-term flourishing of the companies we invest in – and of the economy as a whole.
Speaking of the economy as a whole, both the national and local numbers are pretty strong this month, as you can read below. And we’ll have a lot more about New York City fiscal trends in our report on the City’s adopted budget, due out August 11th.
So hopefully you can take an end-of-summer vacation, and breathe a little easier, while we keep watching the numbers.
Sincerely,
Brad Lander
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