State Treasurer Tobias Read aims to make the $100 billion Oregon Public Employees Retirement Fund, the 16th largest pension fund in the nation, carbon neutral by 2050.
The fund currently has approximately $5.3 billion invested in fossil fuel companies and $1 billion in companies that mine and burn coal, according to an April 2023 report from Divest Oregon.
Mr. Read previewed the framework of the “Net-Zero Plan” at a Jan. 11 meeting of the Oregon Legislature’s Emergency Management, General Government and Veterans committee.
On Feb 6, he will present the full proposal to the five-member Oregon Investment Council (OIC). Mr. Read hopes that OIC will embrace his goal of 50 percent decarbonization of the state’s assets by 2035 and net zero greenhouse gas emissions (GHG) by 2050. He may also propose a more ambitious target as early as 2040.
If approved by that council, of which Mr. Read is a member, the plan will then advance to the State Legislature for consideration during its short 35-day session that convenes Feb. 5. Lawmakers can then decide whether to provide resources to implement the plan.
Mr. Read projects implementation of the plan over a four-year period beginning in 2024. By 2028, the State Treasurer’s office would begin to divest itself of investments in fossil fuel companies and industries with high emissions and into investments that support a reduction in GHGs.
But reaching the point of net zero emissions will not be easy.
“If you ask, how much do you have invested in Chevron? That’s a relatively easy answer,” Mr. Read said. “But if you said, ‘What’s our investment in Berkshire Hathaway, that’s about $158 million … but there are tons of subsidiaries of Berkshire Hathaway.”
“Drilling down into who Berkshire Hathaway is investing in becomes more complicated.”
The bill would also face strong opposition.
Whose Money?
When a similar piece of legislation (HB2601) was introduced during the 2023 legislative session, it was projected to result in a significant loss of returns from public employee pensions.
Senate Republican Leader Tim Knopp testified against the bill.
“This bill makes a damaging assumption that the retirement funds of public employees belong to the State of Oregon,” Mr. Knopp testified.
“That assumption is both dangerous and wrong. This money belongs to public employees. It belongs to firefighters, police officers, teachers, and all those who serve Oregonians every day,” said Senator Knopp.
“Oregon Courts have affirmed over the past thirty years that the money in the public employee retirement fund belongs to public employees, not to the state or state lawmakers. We cannot and should not do anything to usurp their decision-making authority about how their money is invested and that would lead to a decline in their earnings or their retirement future,” concluded Mr. Knopp.
During his Jan 11 testimony, Mr. Read said that his priorities as a fiduciary are not at odds with the Net Zero Plan.
“Climate change is real,” Mr. Read told the committee. “Planning and acting now to address the investment risks and opportunities of the climate crisis is a critical next step in making sure the pension fund will produce strong returns for public employees for generations to come.”
Strange Bedfellows
Ironically, the Oregon Treasury developed its Net-Zero Plan in partnership with global consultancy group McKinsey and Company at a cost of $1.9 million, according to the agreement dated June 2, 2023.
On its company website, that firm boasts of its global reach in the fossil fuels industry.
“Over the past 5 years, we have advised 55 percent of the world’s top 20 oil and gas companies on capital productivity, on more than 285 projects spanning all major hydrocarbon basins.”
In another twist, McKinsey and Company was named in a lawsuit filed last year by Oregon’s Multnomah County—the state’s most populous county and home to Portland.
The county sued more than a dozen fossil fuel and coal-producing companies for nearly $52 billion, seeking to hold defendants accountable for damages related to an extreme weather event in 2021.
The county also wants defendants to contribute an additional $50 billion to “study, plan and upgrade the public health care services infrastructure to ‘weatherproof’ the county from future extreme heat events and to safeguard the public health,” according to the lawsuit.
The suit does not explain how these upgrades could occur without using fossil fuels in manufacturing, shipping, or construction.
Killing Coal
Mr. Read’s presentation came on the heels of a Jan 10 visit to the Capitol by Divest Oregon, a statewide coalition of racial, climate justice, youth leaders, and faith communities, promoting the Clean Oregon Assets Legislation (COAL) Act, a bill that would divest the state’s Public Employees Retirement System of fossil fuels by targeting coal.
Oregon state leaders voted to phase out coal as an energy source in 2016, becoming the first state in the United States to do so. Utilities have until 2035 to ensure the electricity they provide is coal free.
Divest Oregon said the state’s public employees retirement fund should follow suit.
The Democrat sponsored COAL Act would direct the treasury department to divest the state retirement system of those holdings.
The Climate Agenda
Oregon has been on the leading edge of climate change policies. adopting one of the nation’s first greenhouse gas reduction goals in 2007, seeking to reduce those emissions 75 percent from a 1990 baseline by 2050.
In 2022, the state adopted measures to require 100 percent Zero Emission Vehicles by 2040, electrify the transportation sector, and reduce onsite energy use for new buildings. Recently, Oregon’s Department of Environmental Quality completed rules requiring natural gas suppliers to reduce their GHG emissions by 90 percent by 2050.
But divesting its pension plan could be challenging.
In 2020, New York State announced it would divest its $225 billion Common Retirement Fund from fossil fuels—among the largest pension fund divestments ever undertaken in the nation.
That policy is still in litigation.
