Key Takeaways
- • NYC Comptroller Mark Levine launched a search for asset managers to provide public equity passive indexing services, which make up the majority of the city's $127 billion in public equity investments.
- • The search follows a 2025 recommendation by former Comptroller Brad Lander to drop a $42 billion mandate with BlackRock, along with mandates with Fidelity and PanAgora, over failures to submit net zero-aligned decarbonization plans.
- • The process keeps BlackRock eligible to win a new mandate, and existing contracts expire by the end of 2026.
- • The city's pension systems, with nearly $300 billion in total assets, last ran a public equity index bid in 2017.
Summary
New York City Comptroller Mark Levine announced that the city's five public pension systems have launched a search for asset management firms to provide public equity passive indexing services. According to the announcement, these indexing mandates make up the majority of the systems' $127 billion in public equity investments. The pension systems collectively manage nearly $300 billion in assets, making them among the largest public pension systems in the U.S. They include the New York City Employees' Retirement System (NYCERS), the Teachers' Retirement System (TRS), and the Board of Education Retirement System (BERS). The Comptroller acts as investment advisor to and custodian of the funds' assets.
The bidding process follows a recommendation made last year by former Comptroller Brad Lander that the pension funds drop a $42 billion investment mandate with BlackRock, as well as mandates with Fidelity and PanAgora. Lander's recommendation centered on the managers' failure to submit decarbonization plans aligned with the pension systems' net zero goals. His criticism focused largely on how these managers approached compliance with new Trump administration SEC reporting requirements, which he said led BlackRock and Fidelity to adopt more restrictive approaches to engagement and proxy voting than other large asset managers. Earlier this year, Levine's office reported that BlackRock and Fidelity remain "insufficiently aligned" with net zero expectations, while noting that PanAgora has strengthened its approach.
The pension boards launched a Net Zero Implementation Plan in 2022, with a goal of achieving net zero emissions by 2040 and a requirement that asset managers submit net zero plans in 2025. The new search keeps BlackRock eligible for a mandate. The pension systems' last public equity index bid was in 2017, and existing contracts expire by the end of 2026. The Comptroller's office said it is seeking managers for capitalization-weighted indexes, smart beta or alternatively weighted indexes, and other indexed portfolios, including those based on ESG factors and carbon limits.
In Levine's words, "Fulfilling our mandate of delivering strong returns for our public sector workforce and retirees requires ongoing review of our contractual relationships with each of our asset managers. We cannot keep these relationships on autopilot." BlackRock previously called the Comptroller's statements in the prior year "another instance of the politicization of public pension funds." In a statement to ESG Today, a BlackRock spokesperson said the firm is proud to be a long-standing client of New York City and looks forward to continuing its work with the city's public employees.
The bidding process follows a recommendation made last year by former Comptroller Brad Lander that the pension funds drop a $42 billion investment mandate with BlackRock, as well as mandates with Fidelity and PanAgora. Lander's recommendation centered on the managers' failure to submit decarbonization plans aligned with the pension systems' net zero goals. His criticism focused largely on how these managers approached compliance with new Trump administration SEC reporting requirements, which he said led BlackRock and Fidelity to adopt more restrictive approaches to engagement and proxy voting than other large asset managers. Earlier this year, Levine's office reported that BlackRock and Fidelity remain "insufficiently aligned" with net zero expectations, while noting that PanAgora has strengthened its approach.
The pension boards launched a Net Zero Implementation Plan in 2022, with a goal of achieving net zero emissions by 2040 and a requirement that asset managers submit net zero plans in 2025. The new search keeps BlackRock eligible for a mandate. The pension systems' last public equity index bid was in 2017, and existing contracts expire by the end of 2026. The Comptroller's office said it is seeking managers for capitalization-weighted indexes, smart beta or alternatively weighted indexes, and other indexed portfolios, including those based on ESG factors and carbon limits.
In Levine's words, "Fulfilling our mandate of delivering strong returns for our public sector workforce and retirees requires ongoing review of our contractual relationships with each of our asset managers. We cannot keep these relationships on autopilot." BlackRock previously called the Comptroller's statements in the prior year "another instance of the politicization of public pension funds." In a statement to ESG Today, a BlackRock spokesperson said the firm is proud to be a long-standing client of New York City and looks forward to continuing its work with the city's public employees.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.