, introduced by Oregon State Treasurer Elizabeth Steiner, would create pathways to slowly reduce Oregon鈥檚 Public Employees Retirement System鈥檚 carbon footprint while increasing investments in green energy and climate-related projects. It would also require the state treasurer to submit biennial reports to the state Legislature for increased transparency.
PERS is the state pension and investment plan for more than 390,000 current and retired state, school and local government workers.
Climate change threatens the long-term performance of the state鈥檚 PERS funds, 鈥渨hich is why Treasury set the Net Zero goal,鈥� Steiner wrote in testimony she intended to submit Tuesday to the House Committee on Emergency Management, General Governance and Veterans. 鈥淕oing forward, we will keep our investment strategies up to date with the evolving climate science and the emerging growth opportunities the transition to clean energy offers.鈥�
The bill stems from former State Treasurer Tobias Read鈥檚 鈥溾�� plan, which aimed to have PERS investments achieve net zero emissions by 2050. Net zero means finding a balance between the amount of greenhouse gases emissions produced, like from oil and gas, with how much carbon is removed from the atmosphere.
It comes at a time when Republicans nationally are taking the opposite approach to climate policies. President Donald Trump has issued executive orders and taken other actions aimed at increasing production of carbon-emitting gas and oil, slowing or halting support for federal energy infrastructure, and removing federal incentives for electric vehicles.
Republican lawmakers in Oregon did not respond to a request to comment on Steiner鈥檚 proposal to incorporate the state鈥檚 climate goals into PERS investment choices.
Currently, PERS鈥� overall portfolio is about $94 billion and it pays out more than $400 million in retirement benefits every month. As of 2021, about $3.6 billion, or about 3% of the overall fund, was invested in fossil fuels.
As state treasurer, Steiner said, it鈥檚 her job to ensure benefits are paid 鈥� and to reduce the burden on current public employees paying into the fund.
鈥淭he better funded a pension system is, the less current public employers have to pay in to make up, right? What our analysis tells us is that market forces are soon 鈥� soon being a somewhat squishy term 鈥� going to make carbon intensive investments not profitable,鈥� she told OPB. 鈥淎s fiduciaries, it is our job to be aware of that and pay attention and look at changes in markets and adjust our portfolio鈥檚 holdings.鈥�
Since 2016, PERS investments in green energy transition infrastructure have increased by 20%.
Normally, Steiner said, this is not something the state treasurer would come to the Legislature with. But she said she needs help to find a middle path that will slowly but steadily reduce the fund鈥檚 carbon footprint and increase green energy investments over an extended amount of time.
According to the 鈥淎 Pathway to Net Zero鈥� plan, the goal is to cut the portfolio鈥檚 carbon emissions by 60% by 2035 and reach net zero by 2050.
鈥淭he problem is that, for some people it鈥檚 hard to dissociate divesting from carbon-intensive businesses, because it鈥檚 a smart thing to do as a fiduciary of a pension, fund versus divesting from fossil fuels or other carbon intensive businesses because it鈥檚 the right thing to do for the climate,鈥� she said. 鈥溾�e are doing this bill because it is the right thing to do to protect the pension fund.鈥�
But change won鈥檛 happen all at once.
Steiner said she recognizes climate change is happening, but she and her team are paying attention to the profits carbon-intensive businesses, like fossil fuel companies, pipelines, refineries, and concrete companies, could return in the next four years, all while ensuring the pension is protected and benefits are being paid.
鈥淎s state treasurer, with my investment team, I have to pay attention to market forces,鈥� she said. 鈥淪o, we may do things a little differently in the next 4 years than we might have done if we had a different federal administration.鈥�
Overall, Steiner said, the bill is about being prepared to respond to market changes and the 鈥渋nevitability that carbon-intensive businesses won鈥檛 be as profitable, and greener alternatives, climate-friendly investments will be.鈥�
鈥淚t鈥檚 laying it out in statute, with open transparent reporting, so that everybody鈥檚 clear what we鈥檙e doing and why we鈥檙e doing it,鈥� she said. 鈥淲e鈥檙e doing it to protect the pension fund, we鈥檙e doing it to protect retirees, we鈥檙e doing it to protect current public employers, and we鈥檙e doing it in a thoughtful, clear way so that we don鈥檛 take unnecessary risks with our pension fund.鈥�
Steiner said she is also asking for a budget increase to hire more staff to analyze the true carbon impact of businesses the fund is currently invested in. She also wants staff to better understand how to best assess market changes and what climate investments will help the fund, and build out expertise to be ready when the market changes.
