Leading the Way in Environmental Innovation and Management: The Comptrollers Role in Ensuring the Citys Sustainability Hurricane

Sandy and other natural disasters have made it increasingly clear that failing to address climate change carries heavy economic costs. Making our world sustainable is not strictly a moral imperative: it is a financial and economic imperative, and we cannot divorce fiscal sustainability from our environmental future. Creating a more sustainable and resilient model of how cities like New York can function requires steadfast and constructive leadership, as well as the full participation of all levels of government. Leading thinkers in government, asset management and sustainability have come to agree: Failing to consider potential environmental costs can have devastating fiscal and physical costs. As we saw in Hurricane Sandy, which cost the City and State upwards of $30 billion in damages and lost economic activity, ignoring the potential for environmental harms is no longer a viable approach. In order for our economy to thrive, we must make environmental impact one of the central yardsticks by which we judge our investments. The World Bank, the World Economic Forum1 and other leading economic thinkers are fast developing metrics to allow us to integrate the value of social harms and benefits, as well as environmental costs, into our assessment of an investments financial return. No investment or undertaking that has high environmental costs is, in the long term, financially wise.2 Sound financial management -- whether in assessing budget estimates, investments or the efficacy of City programs -- requires us to incorporate environmental impacts into our financial assessments. Doing so will render our financial projections more reliable. Launching the Office of Sustainability Management To ensure that the City operates, invests and spends in environmentally sustainable ways to save taxpayer money and improve government performance, Scott will establish the Office of Sustainability Management in the Comptrollers Office. It will consult on an interdisciplinary basis with our pension investments managers, auditors,
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Accelerating the Transition towards Sustainable Investing: Strategic Options for Investors, Corporations and Other Key Stakeholders. World Economic Forum. 2 Sustainable Investing in the Anthropocene: State of the Missouri Pension Funds, June 12, 2012. The Capital Institute.

contract analysts, legal claims staff, budget and economic analysts, engineers, and all stakeholders who wish to participate. The Sustainability Office will assist the Comptrollers team in incorporating environmental management measures into all of their core functions. The office will promote sustainable policies and practices throughout the operations and planning of City government and hold government accountable for addressing the environmental impacts and opportunities that affect the long-term success of our city. Pension Investments As Manhattan Borough President, Scott has served as a Trustee to the New York City Employees Retirement System (NYCERS) for nearly 8 years. In this capacity, he has been a leader in promoting environmental sustainability in the investments of our pensions. As a NYCERS Trustee: Scott led, in partnership with District Council 37, NYCERS to become one of the first U.S. pension funds to incorporate questions about environmental, social and governance (ESG) factors in requests for proposals (RFPs) to potential asset managers, requiring managers to report how they address environmental impacts and sustainability of their investments. Scott was the first to propose that NYCERS adopt a comprehensive sustainability policy to include environmental and governance factors in how the fund evaluates and selects investment strategies and managers. Scott supported shareholder initiatives to promote environmental sustainability in corporate practices, including requiring companies to prepare annual sustainability reports, disclose hydraulic fracturing and other environmental risks and report on steps taken to improve worker safety in the energy industry.

A Comptroller, Scott will work collaboratively with fellow trustees to: Develop a comprehensive policy addressing sustainability risk and opportunity in our process of deciding asset allocation, investment strategies and manager selection in ways that can help improve portfolio performance. Work with fellow trustees to increase prudent investments in environmentally sustainable business opportunities that use energy efficiently, reduce pollution and emissions and take advantage of the transition to a low carbon economy. Continue to work actively with other pension funds and the national and international community of investors and experts to research critical economic impacts of environmental harms and their mitigation and identify best practices

for investment policy that will help us meet our long-term obligations. Work with other pension funds and institutional investors to actively engage portfolio companies on corporate governance reforms and shareholder activism that help increase long-term value for our funds.

Economic Development, Sustainability and Energy Efficiency As Manhattan Borough President, Scott has led on countless issues of urban sustainability through his Go Green Initiative and other innovative programs. His record includes: Opening the East Harlem Asthma Centera $3.5 million, 9000-sq. ft. facility located in a neighborhood that has the nations highest rate of childhood asthma Partnering with community groups and non-profit organizations to bring new farmers markets to underserved communities, including the first weekend and first nighttime farmers markets in Harlem Swapping over 10,000 incandescent bulbs for Compact Florescent Light Bulbs (CFL), saving working class people money on their energy bills while decreasing the load on New Yorks energy grid Launching the YouthBucks program, which has distributed $2 coupons to purchase locally grown food to over 20,000 youth Developing the East River Blueway Plan along with Assemblymember Brian Kavanagh, which set a new standard for community-based planning in an era of climate change Funding the construction of over half a dozen green roofs on schools and covering 35,000 square feet of roofing on the Lower East Side with solar-panels to save energy and money Planting thousands of trees on sidewalks and in public housing complexes in Washington Heights, Inwood, and the Lower East Side to reduce Manhattans urban heat island effect Fighting to eliminate toxic Number 4 and 6 heating oil from our Citys affordable housing stock so that all New Yorkers can breathe easier

As Comptroller, Scott will continue to lead the City toward sustainable economic development to promote its fiscal health and long-term success. Scott will prioritize evaluating and promoting the following investments that are important to the Citys financial growth: Building and retrofitting for energy efficiency. New York Citys building stock is aging and often inefficient. Residences and other buildings can use much less energy with simple retrofits for energy conservation and use. Investing in new technologies to use electricity more efficiently and store energy for reuse at peak periods of demand. Many developers are creating new innovations in battery and heat cooling systems to help conserve electrical power currently lost during periods of low energy use, and storing that energy for deployment during periods of peak demand. Investing in technologies that harness biofuels, wind, water and other renewable fuels so that we may reduce reliance on fossil fuels that pollute the air, water and earth. Using technologies that collect and reuse storm water in more efficient ways, as water conservation will be increasingly important in our warming climate. Exploring ways to implement clean electric vehicle technologies, such as in school buses, city buses, taxicabs, sanitation trucks, and other city-owned vehicles.

Audit and Procurement The Sustainability Office will help the Audit Bureau establish metrics with which to assess the efficiency and cost-effectiveness of City programs according to these new standards. There are many sustainability initiatives in place under the current Mayor. As Comptroller, Scott will: Work with the Mayors Office to develop sustainability performance standards by which City contracts may be evaluated and explore the incorporation of sustainability measures into the procurement process for all City contracts. Work with the Mayors Office to revise the Citys procurement rules and processes to include sustainability criteria in bids and requests for proposals issued by the City, and pursue implementation of such standards in Comptrollers Office procurements.

Audit and recommend improvements to critical environmental programs run by the City to ensure they are well-run and managed for maximum efficacy, especially Sandy recovery efforts funded by large sums of taxpayer money. Given the need to expedite rebuilding and resiliency upgrades, there is potential for misspending. Scott will also closely monitor City efforts at tree stewardship to ensure that New Yorks many new street trees are pruned and protected to promote a healthier, more environmentally sustainable city. Recommend strategies to ensure compliance with existing City laws requiring reduction of carbon emissions by 30 percent by 2030 and increased energy efficiency use by large buildings. Ensure the Citys success at energy efficiency and conservation and resource management. Use the audit, contract and budget powers to promote the Citys use of energy efficient infrastructure and ensure efficient technologies in street lighting and light distribution. Audit the effectiveness of the Citys hundreds of millions of dollars of expenditures to maintain and operate its precious upstate water supply system to ensure the sustainability of this resource for the future. Audit the sustainability and environmental costs of the Citys sanitation services, including recycling. New composting efforts have the potential to reduce carbon emissions and waste disposal expenditures, and the Comptrollers Office can encourage this through stringent oversight of sanitation programs.

Bond Issuance Many of the renewable or energy-saving technologies noted above involve smaller scale installations at individual facilities and are often difficult to finance through capital markets. As a result, states and municipalities are beginning to explore aggregation of such projects to secure municipal bond financing. As Comptroller, Scott will work with the incoming Mayor to explore new ways to secure financing for projects for renewable and efficient energy technology. As part of the larger movement toward placing financial value on avoided costs, such as pollution and social harm, the Mayor Bloomberg announced the Citys first Social Impact Bond (SIB) to finance a youth rehabilitation program at Rikers Island. Social impact bonds are private financial investments in City services that pay investors a return if the program meets performance targets. As Borough President, Scott has worked to identify other areas and programs where the SIB model could be used to fund other critical City services. In particular, Scott

highlighted the potential use of SIBs for a first-of-its-kind proposal to fund 1000 more seats for Early Head Start, an early intervention and prevention program for pregnant mothers and families with children ages 0 3 that, despite its successes, has slots for fewer than 1 percent of the Citys eligible infants and toddlers. By investing a small amount in a child in the early years, youth and families are healthier and do better in school, saving the City costs by reducing incarceration and increasing the chances of educational and professional success. As Comptroller, Scott will explore the possibility of launching similar bond programs to help finance programs with a track record of improving lives and avoiding environmental costs especially where problems demand larger solutions than the City or the nonprofit sector can currently support.