TL;DR
New York City’s pension funds are reviewing their asset manager contracts, emphasizing climate and ESG performance. The move aims to align investments with net-zero commitments, potentially impacting major firms like BlackRock.
New York City’s pension systems have launched a search for asset managers that demonstrate strong climate-risk management and responsible stewardship, with the aim of aligning investments with the city’s climate commitments. This move could influence the management of over $127 billion in public equity investments and signals a shift toward prioritizing climate considerations in pension fund decisions.
On March 26, 2026, NYC Comptroller Mark Levine and trustees of the city’s five public pension systems announced a formal search for asset managers to provide passive indexing services, including strategies based on climate and ESG factors. The current contracts, held by firms such as BlackRock and State Street, are set to expire by the end of 2026, prompting a review focused on climate performance.
Three of the pension systems—NYCERS, TRS, and BERS—have adopted net-zero by 2040 plans and have established climate expectations for their asset managers. Recent annual climate reports indicate that most managers are aligned with these goals, but BlackRock has been assessed as insufficiently aligned across all three systems, raising concerns about its suitability for future mandates.
Ben Cushing, director of the Sierra Club’s Sustainable Finance Campaign, welcomed the move, emphasizing that pension funds should only retain managers that meet credible climate-risk standards. He stated that managers’ stewardship responsibilities, such as proxy voting and corporate engagement, should be integral to their mandates and not treated as optional.
Implications for Pension Fund Climate Leadership
This development underscores a broader shift among public pension funds toward integrating climate risk into investment decisions. By prioritizing managers with credible climate strategies, NYC’s pension systems aim to reduce systemic financial risks associated with climate change and set a precedent for other funds nationwide. The move also signals increased accountability for asset managers like BlackRock, which have faced criticism for inadequate climate action.
ESG Risk in Investment Funds and Insurance: Regulatory Perspectives and Market Reaction (Banking, Money and International Finance)
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Background of Climate Standards and Asset Manager Review
In April 2025, NYC pension trustees set standards requiring asset managers to submit net-zero plans, warning that failure to meet these standards could result in losing mandates. In November 2025, former NYC Comptroller Brad Lander recommended re-evaluating BlackRock’s role due to its insufficient climate strategies. The Sierra Club has actively supported these efforts, urging continued strengthening of climate accountability for asset managers. Several European pension funds have already cut ties with BlackRock over similar concerns, reflecting a growing global trend toward climate-conscious investing by public funds.
“This search is an opportunity to put those standards into action and make clear that firms cannot keep major pension mandates without credible climate-risk management, responsible stewardship, and alignment with the pensions’ long-term fiduciary obligations.”
— Ben Cushing, Sierra Club
Remaining Questions About Asset Manager Selection
It is still unclear which specific firms will be shortlisted or awarded new mandates, and how strictly climate performance will influence final decisions. Additionally, how existing managers like BlackRock will respond or improve their climate strategies remains to be seen. The precise criteria and evaluation process for the selection are also not yet fully disclosed.
Next Steps in the Asset Manager Review Process
The city’s pension trustees will review proposals from interested asset managers over the coming months, with final decisions expected before the expiration of current contracts at the end of 2026. The process will likely include assessments of managers’ climate risk plans, stewardship practices, and transparency. The outcome could lead to significant shifts in the pension funds’ investment strategies and set a benchmark for responsible asset management nationwide.
Key Questions
Why is NYC pension system reviewing its asset managers now?
The review is prompted by the expiration of existing contracts in 2026 and a desire to align investments with the city’s climate commitments and responsible stewardship standards.
What standards are asset managers expected to meet?
Managers are expected to demonstrate credible climate-risk management, submit net-zero plans, and engage in responsible stewardship practices such as proxy voting and corporate engagement.
Could this lead to losing existing managers like BlackRock?
Yes, if managers fail to meet the standards or improve their climate strategies, they could be replaced, as indicated by previous recommendations and assessments.
How does this impact public workers’ retirement savings?
It aims to ensure that their retirement funds are invested responsibly, reducing long-term climate-related financial risks and aligning with sustainability goals.
What precedent does this set for other pension funds?
This move could influence other public pension funds nationally and internationally to prioritize climate-responsible asset management in their investment decisions.
Source: CleanTechnica
