NYC Comptroller's BlackRock Clash to Test Mamdani

New York City Comptroller Brad Lander is urging city pension fund officials to re-bid $42.3 billion managed by BlackRock over climate concerns, the first major move by a Democrat to counter pressure on financial companies from Republican allies of the fossil-fuel industry.

Lander's term in office ends on Dec. 31, but his recommendation, announced Wednesday, could put Mayor-elect Zohran Mamdani in the hot seat when he takes office in about five weeks, especially as BlackRock indicated it will seek to keep the business. Mamdani's appointees will take key positions that hold some sway over the pension boards that decide where to invest retirement funds for some 800,000 current and former city employees.

In a Nov. 25 memo to other pension fund trustees, seen by Reuters, Lander urged the funds to re-evaluate contracts with New York-based BlackRock, which is both the world's largest asset manager and the city's largest manager of retirement assets.

Lander cited what he called "BlackRock's restrictive approach to engagement" with about 2,800 U.S. companies in which it owns more than 5% of shares.

'ABDICATION OF FINANCIAL DUTY'

Under pressure from the Trump administration, BlackRock in February said it would not use its discussions with executives to try to control companies. That ran contrary to the hopes of Lander and other environmentally minded investors, who wanted the investors to press executives on priorities like disclosing emissions.

In an interview, Lander said the change was "an abdication of financial duty and renders them unable to meet our expectations for responsible investing."

His recommendation must still be approved by pension boards that traditionally take cues from the comptroller's office. Representatives for Mamdani did not respond to questions. A representative for Lander's elected successor, Mark Levine, said he will review the recommendations.

Lander, a rival-turned-ally of Mamdani during the mayoral campaign, recommended that the pension plans keep BlackRock to manage non-U.S. equity index mandates and other products.

Lander also recommended the three systems continue using State Street to manage $8 billion in equity index assets, and that they drop deals with Fidelity Investments and PanAgora, which he said also do not press companies sufficiently on environmental matters like decarbonization.

In a letter to Lander provided by a BlackRock spokesman, Armando Senra, Head of the Americas Institutional Business, said Lander's claims BlackRock has abdicated its financial duty and put pensions at risk from climate change "are another instance of the politicization of public pension funds, which undermines the retirement security of hardworking New Yorkers."

Senra said if pension officials take up Lander's recommendation, "we look forward to demonstrating the breadth and depth of our capabilities and the tremendous value we deliver" to the city and its public servants.

The other fund managers did not immediately comment.

PRESSURE FROM WASHINGTON

A number of Republicans, some from fossil-fuel-producing states, have withdrawn money from BlackRock and other money managers, accusing them of basing investment decisions on social or environmental issues. New York City funds would be the first large Democratic or liberal-leaning asset owner to respond in kind.

In the interview, Lander said he is "seriously considering" a run for Congress next year, confirming earlier reports, but said his recommendation on BlackRock "has nothing to do" with his future plans. He noted that his review showed 46 of 49 fund managers for the city have decarbonization plans meeting his expectations.

Richard Brooks, climate finance program director for the environmental advocacy group Stand.earth, via e-mail on Wednesday praised Lander's plan to drop BlackRock. "Now, it is critical that the pension trustees, including the mayor's appointees, turn the recommendation into real action," Brooks said.