• 40% Carbon Reduction: Switching coal assets to a responsible investment ETF cut the fund’s carbon exposure by 40%.
• Aligning with Climate Goals: The move supports New York’s larger climate action plans, despite the fund being a late entrant.
• Strategic ESG Investment: The transition helped seed the Calvert U.S. Large-Cap Core Responsible Index ETF, promoting responsible investment.

New York State Insurance Fund Transitions to Responsible ETF

The New York State Insurance Fund (NYSIF) has made a significant shift by reallocating its coal assets to a responsible investment exchange-traded fund (ETF), resulting in an immediate 40% reduction in carbon exposure for its equity portfolio.

Seeking Immediate Impact

“We were looking for quick wins by shifting parts of our portfolio toward goals like reducing emissions,” explained Rajith Sebastian, head of ESG and Sustainable Investing for the $20 billion state fund, at a Reuters NEXT Newsmaker event in New York.

As part of its strategy, the NYSIF applied strict screens against any company or asset manager deriving more than 1% of revenue from coal mining. This policy change not only aligned with the state’s broader climate action goals but also had a substantial impact on its equity portfolio.

Launching a Responsible ETF

In addition to reducing carbon exposure, the fund’s move provided seed money for a new ETF, the Calvert U.S. Large-Cap Core Responsible Index ETF. While this allocation initially sparked internal debate over increasing the fund’s exposure to a single investment, the benefits of aligning with ESG goals outweighed the concerns.

“We got a lot of backlash internally,” noted Sebastian, referencing initial resistance from some stakeholders. “We didn’t even publicize it because we thought, let’s do this, it’s impactful.”

Shifting Holdings

The state fund now holds about 50% of its $354 million in assets within the responsible ETF, down from 95% at the outset. This transition is part of NYSIF’s broader effort to catch up with New York’s larger public-sector pension funds, which have been further along in their climate action plans.

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“We wanted to make a meaningful impact quickly, and this reallocation enabled us to do that while setting a foundation for further responsible investments,” concluded Sebastian.

By rethinking its portfolio, the New York State Insurance Fund is demonstrating that strategic ESG investments can deliver both immediate climate benefits and long-term financial stability.