Israel divestment could cost New York City taxpayers more than $37 billion over the next decade, according to a new report released today by the Anti-Defamation League.
Carried out with its affiliate, JLens, the ADL report examines the potential impact on the city’s pension funds of investment policies excluding companies that do business in Israel.
The analysis compares the 10-year historical performance of two hypothetical large-cap US equity portfolios: one is broadly diversified; the second excludes 47 major American companies targeted by the Boycott, Divestment and Sanctions (BDS) movement, for doing business in Israel, notably Alphabet, Amazon, and Microsoft.
Further findings show that the BDS-excluded portfolio underperformed by about two percentage points annually, which, when compounded over time, could result in substantial differences in long-term returns.
The report estimates approximately $37.55 billion in potential forgone value over a 10-year period – assuming a similar performance gap – when applied to the NYC pension funds’ estimated large-cap US public equity allocations (assets invested in large US companies).
Pension funds, other portfolios would lose tens of billions of dollars
The full report details projections for each of the five NYC pension funds, which together constitute the fourth-largest public pension system in the US.
If the funds, which collectively manage over $300 billion in assets, were to adopt BDS-aligned divestment strategies from 2025 to 2035, the research estimates the following potential losses:
Teachers’ Retirement System: $15.09 billion
New York City Employees’ Retirement System: $10.91 billion
Police Pension Fund: $7.13 billion
Fire Pension Fund: $3.02 billion
Board of Education Retirement System: $1.41 billion
“While some in New York, including Mayor Mamdani, have publicly supported the BDS movement,” Jonathan Greenblatt, ADL’s CEO and national director, said, “this analysis highlights the potentially serious financial consequences of applying BDS-aligned divestment strategies to the city’s pension funds.”
“This research shows that divestment strategies guided by the BDS campaign can be bad fiscal policy, and we believe that they risk contributing to an environment where Jewish New Yorkers are already targeted and marginalized,” he said.
The new ADL report expands on JLens’ 2024 research into university endowments, which found that a BDS-aligned strategy applied to the 100 largest endowments could result in $33 billion in forgone gains over a decade.
“The BDS movement has migrated from college campuses to city halls as universities have become less hospitable to anti-Israel activism. But the investment math doesn’t change with the venue,” Ari Hoffnung, JLens managing director, ADL senior advisor on corporate advocacy, and former NYC deputy comptroller, said.
“Our 2024 research showed that BDS-aligned strategies could cost university endowments $33 billion; this analysis shows that if our assumptions prove true, they could cost NYC pension funds more than $37 billion.
“Whether the target is a university endowment or a public pension fund, the financial consequences will be real – and they will fall on the people these institutions serve: from students and faculty to teachers, police officers, and firefighters.”
The report’s methodology was reviewed by leading legal and financial experts, including Joshua Mitts, the David J. Greenwald Professor of Law at Columbia University.
Mitts: Methodology is standard practice
Mitts said the methodology used is consistent with standard financial practice for evaluating exclusionary strategies.
“For long-horizon investors such as pension funds, understanding the potential financial implications of such constraints is an important component of portfolio analysis,” he explained.
It is worth emphasizing that ADL’s estimate is based on how similar portfolios performed over the previous decade and assumes that a comparable performance gap will persist over the next 10 years.