Public employees filed a lawsuit late Thursday against three New York City pension funds for allegedly violating their fiduciary responsibility by selling shares of fossil fuel assets worth billions of dollars, marking yet another challenge to Environmental, Social and Governance (ESG) investing, Bloomberg reported.
In their complaint filed in the New York State Supreme Court, the plaintiffs allege the pension funds’ choice to sell about $4 billion in oil and gas holdings to take on climate change is “misguided and ineffectual” and they need “to act prudently in making investment decisions,” according to Bloomberg. ESG, also known as “stakeholder capitalism,” places an emphasis on green investing strategies that further climate-focused efforts, such as net-zero emissions.
The plaintiffs include a subway train operator, a teacher and an occupational therapist, according to Bloomberg. They are suing the New York City Employees’ Retirement System, the Teachers’ Retirement System and the Board of Education Retirement System.
Eugene Scalia, a former labor secretary under former President Donald Trump, is representing the plaintiffs, the outlet reported.
The three funds breached their fiduciary responsibility when they chose to sell the holdings to “advance environmental goals unrelated to the financial health of the plans,” the suit alleges, according to Bloomberg. The funds made the decision to divest without taking into account whether it would lead to better financial returns.
New York City Comptroller Brad Lander, who manages pension-fund assets for public employees, has threatened to pull billions of dollars from asset managers that refused to back his climate investing practices. (RELATED: New York City Is Shelling Out $8 Million Per Day To House Migrants)
Numerous Republican attorneys general have pushed back against ESG initiatives spearheaded by firms like Blackrock, claiming the asset-management giant isn’t actually working to make money on behalf of pensioners.
NEW YORK, NEW YORK – APRIL 10: NY Comptroller, Brad Lander speaks during One Fair Wage New York Investor mobilization event on April 10, 2023 in New York City. (Photo by Ilya S. Savenok/Getty Images for One Fair Wage)
“Defendants’ actions in selling off high-performing securities, and prioritizing lower-yield investments, is especially troubling given the plans’ chronic and severe underfunding,” the suit claims, according to Bloomberg.
“While we don’t comment on pending litigation, we take our fiduciary duty very seriously,” a spokesperson from Lander’s office told Bloomberg. The spokesperson cited “the financial risks of investing in fossil-fuel reserves,” and said the decision to divest safeguards beneficiaries.
Lander did not immediately respond to the Daily Caller News Foundation’s request for comment.
All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact licensing@dailycallernewsfoundation.org.