Powerful pension group threatens to cut ties with underperforming managers: 'We will burn trillions of dollars collectively'

New York pension systems are taking a stance on climate accountability by establishing firm deadlines for their investment partners, reported Net Zero Investor.

The five pension funds that form part of the New York City Employees' Retirement System, collectively managing close to $300 billion in assets, have given their listed market managers until June 30 to report on their climate engagement efforts. Investment firms managing private markets have an extra year, with a June 30, 2026, deadline.

Managers who fail to meet these reporting requirements risk losing their relationship with the pension funds.

This approach shows how the financial world is waking up to economic realities. As the global economy shifts away from older energy sources toward cleaner alternatives, long-term investments in traditional fuel companies are becoming financial drags rather than assets.

These older-model businesses typically show weaker performance than companies focused on clean energy, making them less sustainable options if you're looking for long-term growth.

For you and your retirement savings, this change means your money can work harder while supporting industries creating tomorrow's jobs. The NYC pension systems' strategy recognizes that despite market ups and downs, the clean economy's momentum is backed by simple economic sense.

Watch now: Giant snails invading New York City?

When speaking on the Net Zero Investor podcast, New York City Comptroller Brad Lander emphasized the financial stakes. "Most of us are universal owners with a perpetual horizon. We bear the brunt of what will happen if we don't hit the Paris goals — we will burn trillions of dollars collectively," he stressed, referring to the climate agreement about global temperature change.

He also praised similar actions by other major funds, saying he "loved" seeing the decision by a pension in the United Kingdom to divest £28 billion ($37.3 billion) from U.S.-based State Street. He confirmed that the city's retirement funds would also divest from managers who fail to meet expectations.

Despite facing legal pressures from different directions, the pension funds remain committed to their climate goals.

"We are asking all our asset managers to disclose and give us plans," Lander said. "We have to keep our very ambitious climate plan on solid legal footing. We pay attention so that we can be ambitious and win in court when challenged and the SEC doesn't dismiss our ambitions."