New York City Comptroller Brad Lander has called for the city’s pension funds to re-bid $42.3 billion in assets managed by BlackRock, accusing the world’s largest asset manager of failing to meet responsible-investment standards and “abdicating” its financial duty by weakening its climate engagement policies.
The move — unprecedented from a Democratic city official — injects fresh tension into the national battle over ESG investing and positions Mayor-elect Zohran Mamdani at the centre of a high-stakes political and financial dispute when he takes office in five weeks.
Lander, whose term ends on 31 December, issued the recommendation in a detailed memo to trustees on Wednesday, urging the city’s three major pension systems to reconsider their ties with BlackRock over what he described as the firm’s “restrictive approach to engagement” with roughly 2,800 US companies in which it holds more than 5% of shares.
Climate risk as financial risk
The memo is Lander’s final major intervention before leaving office, and it lays out a blistering critique of BlackRock’s stance on climate stewardship. Under pressure from the Trump administration earlier this year, BlackRock pledged it would no longer use meetings with executives to push companies on issues such as emissions disclosure or emissions targets.
Lander condemned the shift as an “abdication of financial duty”, arguing that climate risk is a clear systemic financial threat that asset managers must address to protect long-term returns.
“As long-term fiduciaries, we cannot afford to look away from material climate threats,” he wrote, noting that New York’s pension systems — representing nearly 800,000 current and retired workers — have already cut financed emissions by 37% since 2019 while achieving strong investment returns.
The comptroller emphasised that 46 of the city’s 49 asset managers submitted net-zero alignment plans that met expectations. BlackRock, he said, was one of only three that failed.
BlackRock fires back: ‘politicisation of pensions’
BlackRock delivered a sharp rebuttal in a letter from Armando Senra, head of the Americas institutional business, accusing Lander of politicising pension oversight.
“These statements are another instance of the politicisation of public pension funds, which undermines the retirement security of hardworking New Yorkers,” Senra wrote.
He insisted BlackRock remained committed to delivering long-term returns and highlighted its three-decade relationship with New York’s public-sector workers.
Senra added that the firm would “look forward to demonstrating the breadth and depth of our capabilities” should the boards revisit BlackRock’s mandate.
A battle shaped by Washington politics
Republicans in several fossil-fuel-producing states have pulled billions from BlackRock and other firms they deem too “ESG-aligned”. Lander’s move marks the first major pushback from the Democratic side — but for the opposite reason: that BlackRock has become less willing to challenge high-emitting companies.
The political significance is heightened by the transition to the Mamdani administration. The incoming mayor’s appointees to key investment and oversight bodies will profoundly influence whether Lander’s recommendations are enacted. Mamdani’s team has not commented.
A spokesperson for Mark Levine, Lander’s successor as comptroller, said only that he would “review the recommendations”.
The crux: BlackRock’s 5% rule
At the heart of Lander’s criticism is BlackRock’s stance on companies in which it holds at least 5% ownership. The firm argues that engaging such companies on issues related to proxy voting could trigger US Securities and Exchange Commission rules requiring a burdensome filing — Form 13D — and force a 10-day pause in trading.
BlackRock says this could undermine index-fund stability.
Lander counters that other major index managers, including State Street, do not apply such strict limitations and have shown “more robust and systematic stewardship” on climate issues.
What stays and what goes
Lander recommended:
- Re-bidding BlackRock’s US equity index mandates (worth $42.3bn).
- Retaining BlackRock for non-US equity mandates, where its climate engagement is stronger and the SEC rules do not apply.
- Terminating Fidelity and PanAgora mandates over similarly restrictive stewardship approaches.
He also urged trustees to adopt a new policy halting future investments in midstream and downstream fossil-fuel infrastructure, saying the long-term financial risks of such assets were too great.
High stakes for pensions — and politics
The decision now rests with the independent pension boards, which traditionally follow the comptroller’s guidance but also answer to the incoming administration.
Lander, who is considering a run for Congress next year, insisted the timing of his recommendation was unrelated to political ambitions.
“This is about fiduciary duty and financial risk,” he said in an interview. “Climate risk is financial risk — and ignoring that would be irresponsible.”
Whether New York’s pension funds will become the first major US public systems to cut ties with BlackRock over insufficient climate action will now be one of the earliest and most consequential tests facing the Mamdani administration.
