An email reviewed by the Daily Caller News Foundation reveals that a nonprofit pushing green investment practices attempted to coordinate with a Democratic financial official to publish an op-ed on climate investment regulations in the official’s name.
The email shows that an employee of Ceres, a green shareholder activism organization that has received money from a major left-wing foundation, reached out to New York State Comptroller Thomas DiNapoli’s office in April 2022 to pitch a draft of an op-ed potentially to be published under his name and that of New York City Comptroller Brad Lander by The New York Times, which later ran a June 2022 piece under Lander’s name headlined “Investors Deserve to Know the Climate Risks Their Assets Face.”
In the piece, Lander — who manages New York City’s pension funds and has been on Ceres’ board of directors since March 2022 — touts mandatory corporate disclosure of climate-related risks and the Securities and Exchange Commission’s (SEC) March 2022 climate risk disclosure proposal, both of which Ceres supports.
“I’m sharing an op-ed that we drafted on behalf of (New York State) Comptroller (Thomas) DiNapoli and NYC Comptroller brad Lander,” Reginald Zimmerman, then a senior communications manager for Ceres, wrote in an April 2022 email to a member of DiNapoli’s staff. “In a nutshell, it discusses how the SEC’s draft mandatory disclosure rule will benefit public pensioners in NY. Would love to get your signoff. Looking to pitch this to The New York Times. Also, do you have contacts for the press team in Comptroller Lander’s office? Happy to discuss next steps.”
Ceres is a green consultancy that works to mobilize the financial sector to address climate change by advocating for Environmental, Social and Governance (ESG) investing. Critics often describe ESG investing strategy as allowing for the injection of a “woke” left-wing agenda into corporate affairs and investment decisions that ought to be politically neutral.
Since 2019, Ceres has received over $5 million from New Venture Fund, a nonprofit administered by Arabella Advisors, according to New Venture Fund’s tax filings. Arabella Advisors is a Democrat-linked consultancy firm that manages several major funds that donate to liberal causes and organizations; several of these funds are not required to disclose their donors, and have donated millions to the New Venture Fund.
Arabella Advisors’ network of nonprofits collectively shelled out approximately $1.4 billion to scores of left-of-center causes and activist organizations in 2022 alone.
“This episode raises a series of questions regarding ethics and the public’s ability to place its trust, and its finances, in its government officials,” Michael Chamberlain, the executive director of Protect the Public’s Trust, a government watchdog group, told the DCNF. “Regardless of whether the relationship is consistent with the letter of ethics laws, the public certainly could be forgiven for looking askance at the individual placed in charge of making investment decisions regarding public funds serving on the board of an organization that clearly has an interest in how those investments are directed.”
“The issues inherent with that relationship would absolutely be exacerbated if that organization was caught surreptitiously placing words in his mouth through ghost-written media campaigns designed to leverage official government titles for the benefit of well-financed special interests,” Chamberlain added.
DiNapoli, who is also on Ceres’ board of directors alongside Lander, does not appear to have ever published an op-ed on the subject with the NYT or any other outlet.
The text of the attached draft of the opinion piece is redacted, so it cannot be directly compared to the Lander op-ed that the NYT published in June 2022. However, Lander’s opinion piece lines up quite well with the general idea that Zimmerman pitched on behalf Ceres in April of that year.
“For investment managers like me, who oversees New York City’s pension funds, understanding those exposures is essential to mitigating risk across our portfolio to secure strong returns for the city’s public-sector workers. Yet under the current regulatory framework, investors are largely in the dark about those perils,” Lander wrote in the op-ed, which praises the SEC rule and the concept of mandatory corporate climate risk disclosure. “The SEC’s proposed rule mandating climate-risk disclosures offers an overdue, urgent, realistic opportunity for investors to get better estimates — and act on them — while they still matter.”
In addition to sitting on Ceres’ board of directors, Lander has also delivered remarks as part of a Ceres-hosted event at least once. He spoke at Ceres’ “Financing a Net Zero Economy” event in September 2022, a one-day event in New York City where “leaders in climate finance” convened to cover topics including “green financin
“Ceres is a nonprofit advocacy organization working on a range of business and financial risk issues. Managing material risk is part of an investor’s fiduciary duty,” a spokesperson for the organization told the DCNF.
“Ceres communicates regularly with investors, pension funds, and public officials on messaging, which they can use (or not) as they see fit in their communications,” the spokesperson continued, adding that Ceres does not compensate Lander or any other member of its board of directors.
As New York City’s comptroller, Lander is tasked with serving as the fiduciary for the city’s five public pension funds, which cumulatively have approximately $264 billion in assets under management, according to the office’s website. The pension funds are supposed to provide retirement security for 750,000 people, including police officers, firefighters healthcare workers and teachers.
Lander has infused climate-related policies into the city’s pensions, with three funds committing to reaching net-zero emissions by 2040, according to the comptroller’s website. He is pursuing a wider investment strategy that aims to have city funds “[divest] from fossil fuels” and “dramatically [scale] up investments in climate solutions.”
The city’s pension funds reported investments of more than $10 billion in “climate solutions” during the fiscal year ended on June 30, 2023, almost doubling the prior year’s reported $5.6 billion, according to Pensions and Investments, a news outlet geared toward institutional investors and financial managers.
Notably, Lander said in September 2022 that the city’s pension funds would need a cash infusion of an estimated $6.8 billion from the city amid lower-than-anticipated returns, according to Pensions and Investments. Lander has also previously warned asset managers that failure to support climate-related shareholder resolutions could prompt the city to pull back funds.
“What the New York City pensions overseen by Lander have done is unilaterally divest from oil and gas based on his personal political agenda, which Ceres closely reflects. This is incredibly harmful, because anytime you reduce diversification in funds as large as the city’s pensions, you are hurting returns,” Will Hild, an opponent of ESG and the executive director of Consumers’ Research, told the DCNF. “Divesting from oil and gas is a bad idea because they are countercyclical to fly-high tech stocks and other financial products that benefit from a lower interest rate environment. Commodities, oil and gas and mining-related stocks, which are disfavored by ESG funds, perform better in a higher interest environment like we are seeing now.”
A group of New York City employees, including an operator of subway trains and a teacher, sued three municipal pension funds in May 2023 and alleged that the funds’ moves to shed approximately $4 billion of fossil fuel-related assets were in violation of the funds’ “duty to act prudently in making investment decisions.” While Lander’s office told Bloomberg News at the time that the comptroller and his team “take [their] fiduciary duty very seriously” and that the divestitures are “in accordance with their fiduciary duty,” the plaintiffs assert in their complaint that the decisions are “a misguided and ineffectual gesture to address climate change.”
Of the ten largest ESG funds, eight underperformed the S&P 500 in 2022, according to Bloomberg News, and global ESG funds underperformed the market by an average of 2.5% between 2017 and 2022, according to Terrence R. Keeley, the CEO of 1PointSix LLC who has advised the some of the world’s largest sovereign wealth funds, public pension programs and endowments.
Investment strategy that prioritizes non-financial considerations hurts fund performance in two main ways, Hild told the DCNF.
“Not only are you not investing in companies that would be profitable, but also using their positions in companies in which they stay invested to push a left-wing political agenda that hurts profitability,” Hild told the DCNF. “So, you have missed opportunities on the one hand, and on the other, poorer performance from companies that are still in the portfolio.”
A considerable body of research and analysis also indicates that ESG funds are not as profitable as funds managed with more conventional strategy despite the insistence of its proponents that ESG funds are as or more competitive as any other.
“ESG funds appear to underperform financially relative to other funds within the same asset manager and year, and to charge higher fees,” concludes a June 2022 paper authored by researchers from Columbia University and the London School of Economics. “Our findings suggest that socially responsible funds do not appear to follow through on proclamations of concerns for stakeholders.”
Republican Ohio Rep. Jim Jordan, the chairman of the House Judiciary Committee, slapped Ceres with a subpoena in June 2023 as part of a probe into potential violations of antitrust law. Specifically, Jordan wrote that Ceres appears to be using Climate Action 100+ — a supposedly investor-led campaign pushing corporations to take significant action on climate change — to “facilitate collusion” by pressuring companies into adopting corporate climate policies.
The offices of Lander and DiNapoli did not respond immediately to requests for comment.
Nick Pope on February 12, 2024