Mayor Bill de Blasio, Comptroller Scott M. Stringer and other trustees of the city’s $189 billion pension funds announced today a plan to divest city funds from fossil fuel reserve owners within five years, which would make New York City the first major U.S. pension plan to do so.

In total, the city’s five pension funds hold roughly $5 billion in the securities of over 190 fossil fuel companies. The city’s move is among the most significant divestment efforts in the world to date.

NYC sues the majors

The mayor also said that the city has filed a lawsuit against the five largest investor-owned fossil fuel companies, as measured by their contributions to global warming. The city will be seeking damages from BP, Chevron, ConocoPhillips, Exxon Mobil and Royal Dutch Shell.

The Office of the Mayor said that funds from the lawsuit will be used to protect the city from climate change, improving physical infrastructure like coastal protections and upgraded water and sewer infrastructure. New York City plans to spend $20 billion to improve resilience against rising seas, more powerful storms and hotter temperatures, the mayor’s website said.

The first step in the process is for the trustees at each fund to instruct the Office of the City Comptroller’s Bureau of Asset Management (BAM) to commission an analysis of the proposed divestment and advise the trustees as to the anticipated impact on the risk and return characteristics of the portfolio. The trustees will also seek legal opinion as to whether carrying out the divestment would be consistent with trustees’ fiduciary duties to beneficiaries.

Assuming a positive legal opinion, the trustees would then instruct BAM to carry out the divestment with specified steps and timelines. In the case of this divestment, transactions would likely be carried out in stages in order to reduce transaction and implementation costs.

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