Three of New York City's public pension systems have cut financed greenhouse gas emissions by an average of 48.13 per cent between 2019 and 2025, significantly exceeding their interim net zero targets while delivering a 10.3 per cent net return for the fiscal year. The progress was disclosed in the Fiscal Year 2025 Annual Climate Reports for the Teachers' Retirement System, the Employees' Retirement System and the Board of Education Retirement System, released by New York City Comptroller Mark Levine on 24 April 2026. The disclosure matters because it provides one of the strongest data points to date showing that large institutional investors can deliver substantial emissions reductions across their portfolios while continuing to generate strong financial returns.

 

The Headline Performance Numbers

 

The three pension systems have delivered emissions reductions that exceed their respective interim targets by significant margins. The Teachers' Retirement System achieved a 49 per cent reduction in Scope 1 and Scope 2 financed emissions intensity in its public equity and corporate bond portfolios since 31 December 2019, against a 2025 target of 32 per cent. The Employees' Retirement System achieved a 46.68 per cent reduction against the same 32 per cent target. The Board of Education Retirement System achieved a 45.72 per cent reduction against a 22 per cent target. Across all three systems, the weighted average reduction was 48.13 per cent.

The financial performance achieved alongside these reductions is equally noteworthy. The five public pension systems collectively delivered a 10.3 per cent net return for fiscal year 2025, indicating that the emissions reduction work has not come at the cost of investment performance. This combination of climate progress and financial return is significant because it counters one of the most persistent arguments against integrating climate considerations into pension management, which is that doing so necessarily reduces investment outcomes for beneficiaries.

 

The Asset Manager Engagement Strategy

 

A defining feature of the strategy used by the three pension systems is their engagement with public markets asset managers. As of the end of fiscal year 2025, virtually all of the three systems' public markets asset managers had agreed to align with the systems' expectations that managers adopt a net zero goal, science based targets or an acceptable alternative approach to support a transition to a net zero economy. Managers are assessed primarily on whether they have a systematic approach to engaging their portfolio companies to drive real economy decarbonisation.

This engagement based approach is commercially significant because it leverages the influence of the pension systems on their asset managers, who in turn engage with thousands of underlying portfolio companies. By making net zero alignment an expectation of asset management appointment rather than a peripheral preference, the pension systems are using the structural relationships within the investment chain to push climate considerations deeper into corporate behaviour. All asset managers submitted plans in response to the systems' expectations, with many creating or enhancing practices specifically to meet net zero goals while remaining consistent with fiduciary duty.

 

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The Extension Into Private Markets

 

The pension systems have extended their net zero expectations into private markets investment. All private markets asset managers of funds receiving commitments since the expectations took effect last year have submitted plans for alignment with the systems' net zero goals. As of January 2026, the Bureau of Asset Management updated the due diligence questionnaire used to inform investment recommendations, adding more specific questions about asset managers' approach to climate related issues, including climate related value creation, assessment of physical risks and resilience.

The integration of climate considerations into private markets due diligence is particularly significant because private markets have historically been less transparent and less regulated on climate disclosure than public markets. By embedding climate questions directly into the due diligence framework used for fund commitments, the pension systems are creating consistent expectations across both public and private market exposures. This is consistent with the broader trend among large institutional investors of treating climate alignment as a structural investment requirement rather than a separate ESG add on.

 

The Engagement With Companies and Industry Frameworks

 

The systems have engaged with more than 100 public companies on climate change since the adoption of the net zero implementation plan, encouraging the adoption of science based targets and other decarbonisation measures. The Bureau of Asset Management participates as a signatory of the Net Zero Asset Owners Alliance on behalf of the Employees' Retirement System and currently serves as Co Lead of the Alliance's Engagement Track. It has also joined the Institutional Investors Group on Climate Change Global Real Estate Sustainability Benchmark on behalf of the same system, providing an industry leading voice in the development of climate frameworks.

During Climate Week 2025, the Bureau co hosted a roundtable for 50 private equity managers to work on portfolio decarbonisation and value creation. It also formally joined the ESG Data Convergence Initiative, a global consortium of limited partners and general partners that promotes industry wide convergence on standardised environmental, social and governance metrics in private markets. These initiatives are significant because they extend the influence of the New York City pension systems beyond their direct portfolio into the broader institutional ecosystem that shapes climate practice across global capital markets.

 

Targeted Engagement on Specific Sectors

 

The systems have also pursued more targeted engagement on specific sectoral issues. They convened a roundtable focused on addressing the need for a mutually agreeable framework for setting and assessing emissions reductions targets in the utility sector, which is one of the most challenging sectors for emissions accounting because of regional differences in grid composition. They have begun engaging with portfolio companies on the environmental impact of artificial intelligence data centres, which are driving up carbon emissions and electricity costs in many regions.

The data centre engagement is particularly notable because it represents one of the first sustained institutional investor responses to the rapid expansion of AI infrastructure. As hyperscale data centres consume increasing amounts of electricity and put pressure on local grids, their carbon footprint has become a strategic concern for both technology companies and the institutional investors that hold their shares. By engaging early on this issue, the pension systems are positioning themselves at the front of a debate that is likely to grow significantly over the coming years.

 

The Banking Sector Disclosures and Energy Supply Ratio

 

The systems have re filed shareholder proposals at Bank of America, Goldman Sachs, Morgan Stanley and Wells Fargo requesting an energy supply ratio, which measures the banks' financing of clean energy versus oil and gas. This follows successful engagement in 2024 in which the systems reached agreements with JP Morgan, Citigroup and Royal Bank of Canada to disclose the ratio. JP Morgan and Citigroup disclosed the ratio for the first time in 2025, and Royal Bank of Canada calculated and disclosed its own ratio along with the underlying methodology.

The energy supply ratio is becoming an increasingly important metric for evaluating bank climate strategy because it captures both the financing of clean energy and the financing of fossil fuel activities in a single comparable measure. The progress made by the New York City pension systems in driving disclosure of this ratio across major banks contributes to a broader transparency agenda that supports more informed investor decision making across the financial sector.

 

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Investments in Climate Solutions

 

Beyond emissions reductions, the systems have continued to exceed their goals for investments in climate change solutions. As of 30 June 2025, the Teachers' Retirement System had 7.34 billion dollars invested or committed to climate change solutions, the Employees' Retirement System had 5.4 billion dollars and the Board of Education Retirement System had 726 million dollars. The Comptroller's Office continues to review strategies for increasing these investments consistent with fiduciary duty.

The dual track approach, combining emissions reduction across existing portfolios with active investment in climate solutions, reflects how leading institutional investors are now structuring their climate strategies. By addressing both sides of the carbon equation, the systems can simultaneously reduce risk exposure to carbon intensive sectors and capture upside from the growth of low carbon industries.

 

Why the Disclosure Matters for the Wider Pension Industry

 

The wider significance of the New York City pension systems' disclosure lies in what it indicates is achievable when large public pension funds make systematic commitments to climate alignment. A 48 per cent reduction in financed emissions over six years, achieved while delivering a 10.3 per cent annual return, provides a powerful counterargument to claims that climate aligned investing carries an inherent return penalty. As public pension funds across the United States and internationally continue to debate their approach to climate considerations, the New York City example offers a tangible reference point.

For the broader sustainable finance landscape, the disclosure reinforces the role of large public pension systems as drivers of corporate climate practice through their influence on asset managers and portfolio companies. The performance of the systems over the coming years, as they continue to push toward their 2040 net zero target, will provide an important indicator of how feasible deep portfolio decarbonisation is at the scale of major public pension funds.

 

Source: New York City Comptroller