By Ross Kerber
June 12 (Reuters) – BlackRock will have a chance to keep managing New York pension money as City Comptroller Mark Levine opened a rebidding process widely on Friday despite his predecessor’s call for the city to drop the manager over its climate record.
In one of his last acts in office, Levine’s predecessor Brad Lander in November recommended major city pension funds drop BlackRock and rebid its public equities index mandates.
Lander made the move in response to what he saw as BlackRock’s retreat on climate concerns, with the asset manager putting less pressure on portfolio companies as appointees of U.S. President Donald Trump gained oversight of the finance industry.
But Levine has been in no hurry to execute Lander’s wishes in his supervision of the pension fund holdings that include some $127 billion held in public equity investments, $80 billion of which is in passive index products. BlackRock and State Street are large managers of those funds, with BlackRock managing $62 billion across all public equities for the city.
Bids for the public equity index services were last solicited in 2017 and were renewed for two three-year terms since by pension boards, setting up Levine’s new rebidding as a potential big inflection point for the assets.
“All managers are welcome to bid on this,” a spokesperson for Levine said, when asked if Levine hoped BlackRock would seek to continue the work.
“We cannot keep these relationships on autopilot. I look forward to working with my fellow trustees to ensure we select the managers that meet our highest standards of performance,” Levine said in a statement.
Large asset managers have faced growing pressure from pension funds keen to see their views on climate and social questions reflected through proxy voting and other financial processes.
In September, Dutch pension fund PFZW said it had stopped investing in stock funds managed by BlackRock, in part because of concerns over the New York-based firm’s voting record on sustainability issues. A number of U.S. Republican officials, some from fossil-fuel-producing states, have taken similar steps for opposite reasons, accusing BlackRock and others of over-emphasizing the same concerns.
Looking to resolve matters, BlackRock and rivals have also built up programs that allow investors to influence proxy voting directly, shifting responsibilities away from the asset managers’ own stewardship teams.
New York Mayor Zohran Mamdani has not spoken about BlackRock although he too has some sway over city pension funds and once campaigned as a Lander ally. Mamdani’s office has not responded to questions about his views on the pension assets.
“We are proud that New York City is a long-standing client, and we look forward to continuing our work with them so that New York’s police officers, firefighters, teachers and other public employees can have a secure retirement,” a BlackRock spokesperson said in an e-mailed statement.
State Street did not immediately comment.
Winning bidders of New York City’s pension contracts will still have to meet the funds’ existing climate standards.
(Reporting by Ross Kerber; editing by Simon Jessop and Nia Williams)
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