We invest millions in Ford, GM. Here's why fighting strong fuel standards is 'the wrong move'

  • In my role as investment adviser to the New York City's pension funds, I am calling on American automakers to resume supporting strong national fuel-economy and emissions standards.
  • Whittling away at the standards will undermine the global competitiveness of the U.S. auto industry.
Sale signs on vehicles at a General Motors Chevrolet dealership in Ferndale, Michigan.
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Sale signs on vehicles at a General Motors Chevrolet dealership in Ferndale, Michigan.

When you are responsible for $187 billion in pension funds that more than 700,000 people depend on for their retirement security, you consider investments very carefully. Avoiding unnecessary risk is key. So is recognizing opportunity in growing markets and innovative companies.

That is why, in my role as investment adviser to the New York City's pension funds, I am calling on American automakers to resume supporting strong national fuel-economy and emissions standards. As demonstrated by a Ceres analysis, robust miles-per-gallon standards provide market certainty, spur innovation and make U.S. auto manufacturers and suppliers more competitive in a global market that demands increasingly clean and efficient cars and trucks. They also mitigate climate change, which is one of the world's greatest long-term economic risk factors, and something no serious institutional investor can ignore.

Here's the backstory: in 2011, industry executives joined labor leaders, government officials, consumer advocates and environmental groups in supporting strong miles-per-gallon and emissions standards through the 2025 model year. And that decision has paid off: U.S. automakers have seen record profits as they develop cleaner passenger cars and trucks that go farther on every gallon of gas.

But the installment of a new Administration provoked a sudden U-turn. Car companies have wasted no time in calling for loosening the standards and rolling back the progress they had previously supported. It's a dangerous and short-sighted back-track – the transportation sector is now the largest source of greenhouse gas emissions in the U.S., making preserving these standards critical to meeting our climate goals.

"Opening the door to dirtier cars that guzzle more gas is exactly the wrong move for the American auto industry. It's like making a bet on beepers in an age of smart phones."

Whittling away at the standards will undermine the global competitiveness of the U.S. auto industry. As shareholders in its biggest companies – with more than $250 million worth invested in Ford and General Motors alone – we believe we have a duty to weigh in on this move, on behalf of our pension beneficiaries and the economy as a whole.

Opening the door to dirtier cars that guzzle more gas is exactly the wrong move for the American auto industry. It's like making a bet on beepers in an age of smart phones. No consumer is going to get excited about paying more for options that deliver less.

For consumers – everyday families, and businesses small and large – the fuel savings on more efficient cars and trucks adds up. And when people and businesses have more money in their bank accounts, they tend to spend it, boosting economic growth in our communities, creating jobs and strengthening our nation's economy.

Giving up on strong standards means slowing the pace of innovation and investment. And that would allow foreign automakers to pull ahead of America's auto industry at a time when auto markets are increasingly global, and governments around the world are adopting standards that place a premium on clean, efficient, advanced vehicles. Not only are other countries requiring cleaner vehicles, but China, India, France, the United Kingdom and other nations have announced plans to ban traditional internal combustion engines entirely.

In response, automakers are bringing more and more advanced-technology rides to market, from conventional vehicles that get great gas mileage to hybrids to plug-in electric vehicles that go farther on a charge than ever before.

A two-year government review of the national gas mileage and emissions standards through 2025, reinforced by independent analyses, confirmed that the goals are economically and technically feasible. And given that transportation is now the largest source of U.S. greenhouse gas emissions, cleaner and more efficient vehicles have a key role to play in curbing climate change and the myriad risks it poses to our economy, City and planet, as well as to the City's pension funds.

Rather than spending time, money and political capital fighting for a rollback, U.S. automakers need to get on with becoming the leading car and truck manufacturers on the planet. They need to double down on building quality vehicles that offer a great driving experience while using less fuel and emitting less pollution. Doing so will help ensure their continued competitiveness — and keep institutional investors comfortable enough to keep betting American.

Commentary by Scott Stringer, the comptroller of New York City. He serves as investment advisor to — and custodian of — the $180 billion New York City Pension Funds. Follow him on Twitter @NYCComptroller.

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