Three of New York City’s pension funds have filed a motion to dismiss a lawsuit alleging that the funds have breached their fiduciary duty by selling billions of dollars of fossil fuel assets.
In an August 15 announcement, New York City Comptroller Brad Lander called for the “baseless” lawsuit to be dismissed, adding that it was a “weak attempt by anti-ESG, anti-union forces to undermine the decisions by [the] pension system trustees to assess the very real risks of climate change to their portfolios.”
The lawsuit, filed in May, was brought against the Teachers’ Retirement System, New York City Employees’ Retirement System, and the Board of Education Retirement System, by four public employees and future pension beneficiaries along with an “Oklahoma anti-union advocacy group.”
Lander argued that the lawsuit should be dismissed because the divestment will have no impact on their retirement benefits, which the funds argue means they lack standing to sue. He added that legal precedent forbids courts from “second-guessing” the discretionary investment decisions of the system’s publicly accountable trustees.
The three pension systems had voted to divest from fossil fuel companies in 2021, following an “extensive fiduciary process,” in which they argued that portfolio exposure to fossil fuels resulted in stranded asset risks.
“Rather than advancing the actual interests of our city’s public employees and retirees, the lawsuit seeks to protect companies that continue to focus on fossil fuels, despite the ongoing and necessary transition to a low carbon economy,” said Lander. “The courts should call this lawsuit what it is and dismiss it with prejudice.”