Oregon State Treasurer Tobias Read pledged his support for decarbonizing the Oregon Public Employee Pension Fund (OPERF) by transitioning to a net zero carbon emission investment portfolio by no later than 2050, consistent with the goals outlined in the Paris Climate Agreement. Treasurer Read announced that he will present the Oregon Investment Council (OIC) in early 2024 with a comprehensive proposal to implement this goal.
“Today is the first step in what will be a comprehensive and strategic effort to address the impacts of climate change on the funds we manage on behalf of Oregonians,” said Treasurer Read. “Our investment decisions must be driven by financial considerations and investment returns, not politics. The reality is we must reduce the risks that climate change poses to our investments and to the retirement security of Oregon’s hardworking public servants and their families.”
The Treasurer is one of five voting members of the OIC and serves as the state’s chief investment officer. The other four voting members are appointed by the Governor and approved by the Oregon Senate. All members are bound by their fiduciary duty and existing statutory requirements to make the funds they manage as productive as possible within prudent investment standards.
“Addressing the risk of climate change to our investments is critical to our mission to provide a secure retirement to Oregon’s teachers, firefighters, nurses, and other hardworking public servants. It will not happen overnight and must be done in a manner that acknowledges both the complexity of our global economy and the urgency of the emerging climate crisis,” said Read. OPERF is a globally diversified portfolio totaling approximately $90 billion in assets.
The plan, which will be presented for consideration to the OIC in 2024, will be built around the following four components, consistent with Treasury’s fiduciary responsibility:
• First, the plan will include a pledge to achieve net zero carbon emissions by 2050 or earlier, and outline strategies for achieving that goal.
• Second, the plan will establish a baseline emissions measurement and key interim targets for managing climate risks, along with methodologies and frameworks to measure progress on meeting those targets and timelines. It will identify opportunities for expanded investments in low-carbon solutions, and recommend ways to drive enhanced engagement with companies to ensure those companies are addressing their own climate related risks and opportunities.
• Third, it will prioritize a review of portfolio investments in carbon intensive activities like thermal coal, tar sands, and natural gas derived from fracking.
• Fourth, the plan will also recommend transparency and reporting mechanisms to demonstrate progress on meeting its net zero goals.
Read also said that while his staff develops a net zero plan for consideration by the Council, Treasury must accelerate existing efforts to address climate risks inside the investments currently under management. This includes expanding existing investments in renewable energy and clean tech, continuing efforts to more fully incorporate ESG (Environmental, Social, and Governance) risks into Treasury’s portfolio management, and continuing to partner with other institutional investors to push companies to address climate-related risks inside their organizations.
“It is important to maintain strong returns in the pension fund so that current and future retirees have a stable financial future. We must also use every tool we have to fight climate change and protect the vulnerable communities most impacted by it. I am pleased to support Treasurer Read’s plan to achieve these objectives,” said Senate Majority Leader Rob Wagner.
“The Oregon State Fire Fighters Council supports Treasurer Read’s commitment for the responsible decarbonization of the Oregon Investment Council’s pension fund portfolio. It is important that the OIC is transparent with PERS members’ finances and adopts a policy that reflects our commitment to environmentally sound investment income streams,” said Karl Koenig, President Oregon State Fire Fighters Council.
Today’s announcement comes amidst an increasing politicization of institutional investing. Read and other institutional investors have spoken out against misguided attempts by some policymakers to prevent consideration of ESG factors in institutional investing.
Additional support for the plan
Senator Elizabeth Steiner, Co-Chair of the Joint Committee on Ways & Means: “By decarbonizing the pension fund, we can responsibly manage the impacts of climate change on our investments while producing strong returns that will maintain the strength of Oregon’s pension fund and our commitment to retirees.”
Representative David Gomberg, Co-Vice Chair of the Joint Committee on Ways & Means: “Our coastal communities are uniquely impacted by the effects of climate change. I support Treasurer Read’s plan to decarbonize the pension fund, while continuing to generate returns to fulfill our obligations to current and future retirees.”
Representative Janelle Bynum, Chair of the Economic Development and Small Business Committee: “As a business owner I know the importance of sound investments. I am pleased to see Treasurer Read’s continued commitment to his fiduciary responsibility to public servants, while also modernizing the portfolio to meet a new and more volatile climate environment.”
Representative-elect Daniel Nguyen: “By decarbonizing the pension fund, we can responsibly manage the impacts of climate change on our investments while producing strong returns that will maintain the strength of Oregon’s pension fund and our commitment to retirees.”
Representative-elect Ben Bowman: “Treasurer Read’s plan to align the pension fund with the Paris Climate Agreement will help secure a stable financial future for current and future retirees and a healthier and safer climate future for all of us.”
Kirsten Snow Spalding, Vice President, the Ceres Investor Network: “Treasurer Tobias Read has developed a robust strategy for the Oregon Public Retirement Fund to achieve net zero emissions across its portfolio by 2050 and solid interim targets by 2035. The Treasurer and the Oregon Fund recognize the material risks posed by the climate crisis as well as the opportunities unfolding in the transition to a net zero emissions economy. The Treasurer’s decarbonization principles and strategy are sound plans that will help them steward beneficiaries’ savings and Oregon’s general fund for steady growth.”