TL;DR
New York City pension trustees are reviewing and seeking new asset managers for their passive investment mandates, prioritizing firms with credible climate risk strategies. This move follows previous efforts to enforce climate standards on existing managers like BlackRock, with the aim of aligning investments with net-zero goals.
New York City’s pension systems have launched a search for new asset managers to oversee their passive investment portfolios, emphasizing climate-risk management and responsible stewardship. This initiative aims to ensure that firms managing billions in public funds meet the city’s climate standards, as existing mandates are set to expire by the end of 2026.
The five public pension funds of New York City, which hold over $127 billion in assets, are reviewing their contracts with current managers, including BlackRock and State Street, and seeking firms that demonstrate credible climate strategies. The move aligns with the city’s broader commitment to achieving net-zero emissions by 2040 and incorporates climate and ESG factors into manager selection criteria.
Three of the city’s pension systems—NYCERS, TRS, and BERS—have already adopted net-zero plans and reported that most of their public-market managers are aligned with these goals, though BlackRock was rated as insufficiently aligned across all three systems. The new search is a response to these assessments and aims to enforce climate standards more effectively through manager selection.
Implications for Public Pension Climate Leadership
This development signals a significant step in aligning public pension investments with climate goals, potentially influencing industry standards nationwide. By prioritizing managers with credible climate strategies, NYC’s pension funds aim to reduce systemic financial risks associated with climate change and demonstrate leadership in responsible investing. The move also puts pressure on major asset managers to improve their climate stewardship or risk losing lucrative mandates, setting a precedent for other public funds.
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Background of Climate Standards and Asset Manager Scrutiny
In April 2025, NYC pension trustees set standards requiring asset managers to submit detailed net-zero plans, warning that failure to meet these standards could result in losing mandates. The Sierra Club has been actively advocating for stronger climate accountability among public pension managers, criticizing firms like BlackRock for inadequate climate strategies. Previous reviews, including a 2025 recommendation to reconsider BlackRock’s role, highlighted persistent gaps in climate stewardship, prompting the current manager search.
Internationally, some European and UK pension funds have already divested from BlackRock over similar climate concerns, illustrating a broader trend of increasing accountability and climate-focused mandates in public pension management.
“We are committed to ensuring our pension investments reflect our climate commitments and fiduciary responsibilities.”
— NYC Comptroller Mark Levine
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Unresolved Questions About Asset Manager Selection
It remains unclear which specific firms will be shortlisted or awarded new mandates, and how stringently climate performance will be enforced in the selection process. The exact criteria and evaluation process for assessing managers’ climate strategies are still being developed, and it is uncertain whether current managers like BlackRock will face immediate contract termination or will have opportunities to improve their climate practices to retain mandates.
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Next Steps in the Pension Manager Transition Process
NYC’s pension systems will review proposals from interested asset managers over the coming months, with final selections expected before the expiration of existing contracts at the end of 2026. The process will likely include detailed assessments of managers’ climate strategies, stewardship practices, and reporting transparency. The city may also publicly update stakeholders on the outcome and any policy adjustments to strengthen climate standards further.
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Key Questions
Why is NYC reviewing its pension asset managers now?
The review aligns with the expiration of current mandates in 2026 and ongoing efforts to enforce climate standards on asset managers managing public pension funds, including addressing gaps identified in previous assessments.
What criteria will NYC use to evaluate asset managers?
Evaluation will focus on managers’ climate-risk management, stewardship practices, transparency, and ability to meet the city’s net-zero and ESG standards, although specific criteria are still being finalized.
Could BlackRock lose its current mandates?
Yes, if BlackRock or other managers are found to have inadequate climate strategies or fail to meet the city’s standards, they could be replaced, as indicated by past recommendations and assessments.
How might this impact the broader investment industry?
This move could set a precedent for other public pension funds to incorporate stricter climate standards and accountability measures in their asset manager contracts, influencing industry practices nationwide.
What role does the Sierra Club play in this process?
The Sierra Club advocates for stronger climate standards and accountability in public pensions, supporting the city’s efforts and calling for responsible stewardship among asset managers.
Source: CleanTechnica
