Treasury Releases Plan To Achieve Net Zero Carbon Emissions In State Pension Fund By 2050
On Tuesday, Treasurer Read presented to the Oregon Investment Council details regarding Treasury’s plan to transition the Oregon Public Employees Retirement Fund (OPERF) to a net zero carbon emissions portfolio by no later than 2050.
The Net Zero Plan lays out specific actions Treasury will take in the short- and long-term to reduce the amount of carbon emissions associated with OPERF investments and protect the fund’s strong investment returns. To achieve the 2050 goal, Treasury will reduce the portfolio’s carbon emissions intensity by 60% by 2035. Specifically, Treasury will:
• Triple climate positive investments in Private Equity and Real Assets from the current $2 billion to $6 billion by 2035
• Increase percentage of Public Equity holdings that are climate- or transition-aligned
• Exclude new investments in private market funds that have a stated intention to invest primarily in fossil fuels
• Increase the share of portfolio emissions covered by credible net zero transition plans
“The impacts of climate change are being felt across the globe, including in Oregon. 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 far into the future,” said Oregon State Treasurer, Tobias Read. “This plan is a strategic roadmap that positions the pension plan for the future, and allows Treasury to continue to deliver sustainable returns for Oregon’s hard working public employees.”
Additionally, the plan lays out the importance of prioritizing efforts as a responsible investor and shareholder that will lead to real-world emissions reductions. Through increased shareholder engagement and investor partnerships, Treasury aims to encourage the companies it invests in to be net zero-aligned and adopt credible carbon-reduction plans.
“By prioritizing strategies that support transition and decarbonization, we avoid simply shifting the emissions burden to other investors while not doing anything to mitigate climate change in a meaningful way. Financing climate solutions and increasing our corporate engagement will generate more emissions reductions while also producing stronger, sustainable long-term returns,” said Treasurer Read.
The comprehensive plan represents Treasury’s yearlong effort to identify and mitigate climate risks to the public employee pension fund. Following his pledge to support the net zero transition effort, Treasurer Read and Treasury staff worked throughout 2023, with assistance from consultants, to calculate baseline emissions associated with holdings in OPERF’s portfolio, research industry standards regarding net zero planning, engage with beneficiary groups, and evaluate various strategies to decarbonize investments while weighing the impacts of various scenarios on the portfolio.
Treasury’s portfolio emissions baseline covers roughly 80% of total assets under management (AUM), which, at the time of this report’s publishing, was among the highest percentage of AUM reported among North American pension funds that have published net zero plans.
OPERF was valued at $93.8 billion as of January 2024. Treasury manages the fund to meet long-term obligations to beneficiaries and short-term operational needs, such as over $461 million in monthly retirement payments to Oregonians.
The Net Zero Plan contains elements that will be implemented immediately. Several steps central to the plan’s success will require additional work to move forward in 2024. These include, but are not limited to, conducting a carbon-intensive review of public portfolio holdings, establishing mechanisms for transparent reporting, and identifying the organizational capacity needed to accomplish the transition. Treasurer Read presented the plan to the Oregon Investment Council this morning, February 6, during a special meeting to begin the conversation around the next phase of the plan.
Treasury’s Net Zero Plan is available on the agency’s website here: https://www.oregon.gov/treasury/Documents/Site-Documentation/Landing-Page-Documents/Sustainable-Investing/OST-Net-Zero-Plan.pdf
Additional support for the Net Zero Plan:
“We know the climate crisis is already impacting Oregon, so we need to push with every innovation we can. I appreciate Treasurer Read’s leadership on this critical opportunity to support Oregon’s decarbonization efforts.”
Governor Tina Kotek
“As a fire fighter and a legislator, I am fully aware of the risk that climate change presents to our state as well as to Oregon’s pension fund investments. The plan put forward by Treasurer Read is a critical first step in ensuring that our pension fund investments can continue to generate strong returns while being better protected from climate related risks.”
Representative Dacia Grayber
“We appreciate Treasurer Tobias Read's work in developing "A Pathway to Net Zero" to reduce the global warming impacts of the Oregon Public Employee Retirement Fund (OPERF). We value the outreach and engagement that he and his staff did with beneficiaries and stakeholders. Overall, we are encouraged with the plan as a good step forward, while aware that much work remains. We look forward to working with the Oregon Investment Council to fully review and implement the plan, both to adequately fund the retirements of hundreds of thousands of Oregonians and protect them from the ravages of global warming.”
Mike Powers
President, SEIU Local 503
“For Oregon educators, addressing the climate crisis is not just an abstract goal – it’s a real concern we hear about from the students we work with in classrooms and lecture halls across the state every single day. The State Treasurer’s Net Zero plan is an ambitious move in the right direction for the sustainability of our planet, while also maintaining the strength of the PERS fund fur current and future beneficiaries. We look forward to collaborating with the OIC now and in the future on implementing, and maintaining fidelity to, the Net Zero plan.”
Reed Scott-Schwalbach,
President, Oregon Educators Association
"The Divest Oregon coalition welcomes the release of this net-zero plan. We appreciate Treasurer Tobias Read’s regular dialogue with our coalition of over 100 organizations who are dedicated to ensuring that our state pension fund invests in a sustainable future with solid returns. The Treasurer agrees with our coalition that the climate risks to PERS investments are real and require a substantial response to protect the pensions of more than 400,000 Oregonians. With the policies outlined in this plan, the Oregon State Treasury is taking an important step forward in considering these risks. But this is just the beginning: the success of this decarbonization effort requires Treasury's commitment to transparent reporting, a sense of urgency, and responsive policy-making as the effects of climate change on investment portfolios are increasingly understood. We look forward to our continued engagement with the current and incoming Treasurer, Treasury staff, and the Oregon Investment Council as they further define and implement these policies.”
Andrew Bogrand,
Communications Director, Divest Oregon
The Net Zero Plan lays out specific actions Treasury will take in the short- and long-term to reduce the amount of carbon emissions associated with OPERF investments and protect the fund’s strong investment returns. To achieve the 2050 goal, Treasury will reduce the portfolio’s carbon emissions intensity by 60% by 2035. Specifically, Treasury will:
• Triple climate positive investments in Private Equity and Real Assets from the current $2 billion to $6 billion by 2035
• Increase percentage of Public Equity holdings that are climate- or transition-aligned
• Exclude new investments in private market funds that have a stated intention to invest primarily in fossil fuels
• Increase the share of portfolio emissions covered by credible net zero transition plans
“The impacts of climate change are being felt across the globe, including in Oregon. 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 far into the future,” said Oregon State Treasurer, Tobias Read. “This plan is a strategic roadmap that positions the pension plan for the future, and allows Treasury to continue to deliver sustainable returns for Oregon’s hard working public employees.”
Additionally, the plan lays out the importance of prioritizing efforts as a responsible investor and shareholder that will lead to real-world emissions reductions. Through increased shareholder engagement and investor partnerships, Treasury aims to encourage the companies it invests in to be net zero-aligned and adopt credible carbon-reduction plans.
“By prioritizing strategies that support transition and decarbonization, we avoid simply shifting the emissions burden to other investors while not doing anything to mitigate climate change in a meaningful way. Financing climate solutions and increasing our corporate engagement will generate more emissions reductions while also producing stronger, sustainable long-term returns,” said Treasurer Read.
The comprehensive plan represents Treasury’s yearlong effort to identify and mitigate climate risks to the public employee pension fund. Following his pledge to support the net zero transition effort, Treasurer Read and Treasury staff worked throughout 2023, with assistance from consultants, to calculate baseline emissions associated with holdings in OPERF’s portfolio, research industry standards regarding net zero planning, engage with beneficiary groups, and evaluate various strategies to decarbonize investments while weighing the impacts of various scenarios on the portfolio.
Treasury’s portfolio emissions baseline covers roughly 80% of total assets under management (AUM), which, at the time of this report’s publishing, was among the highest percentage of AUM reported among North American pension funds that have published net zero plans.
OPERF was valued at $93.8 billion as of January 2024. Treasury manages the fund to meet long-term obligations to beneficiaries and short-term operational needs, such as over $461 million in monthly retirement payments to Oregonians.
The Net Zero Plan contains elements that will be implemented immediately. Several steps central to the plan’s success will require additional work to move forward in 2024. These include, but are not limited to, conducting a carbon-intensive review of public portfolio holdings, establishing mechanisms for transparent reporting, and identifying the organizational capacity needed to accomplish the transition. Treasurer Read presented the plan to the Oregon Investment Council this morning, February 6, during a special meeting to begin the conversation around the next phase of the plan.
Treasury’s Net Zero Plan is available on the agency’s website here: https://www.oregon.gov/treasury/Documents/Site-Documentation/Landing-Page-Documents/Sustainable-Investing/OST-Net-Zero-Plan.pdf
Additional support for the Net Zero Plan:
“We know the climate crisis is already impacting Oregon, so we need to push with every innovation we can. I appreciate Treasurer Read’s leadership on this critical opportunity to support Oregon’s decarbonization efforts.”
Governor Tina Kotek
“As a fire fighter and a legislator, I am fully aware of the risk that climate change presents to our state as well as to Oregon’s pension fund investments. The plan put forward by Treasurer Read is a critical first step in ensuring that our pension fund investments can continue to generate strong returns while being better protected from climate related risks.”
Representative Dacia Grayber
“We appreciate Treasurer Tobias Read's work in developing "A Pathway to Net Zero" to reduce the global warming impacts of the Oregon Public Employee Retirement Fund (OPERF). We value the outreach and engagement that he and his staff did with beneficiaries and stakeholders. Overall, we are encouraged with the plan as a good step forward, while aware that much work remains. We look forward to working with the Oregon Investment Council to fully review and implement the plan, both to adequately fund the retirements of hundreds of thousands of Oregonians and protect them from the ravages of global warming.”
Mike Powers
President, SEIU Local 503
“For Oregon educators, addressing the climate crisis is not just an abstract goal – it’s a real concern we hear about from the students we work with in classrooms and lecture halls across the state every single day. The State Treasurer’s Net Zero plan is an ambitious move in the right direction for the sustainability of our planet, while also maintaining the strength of the PERS fund fur current and future beneficiaries. We look forward to collaborating with the OIC now and in the future on implementing, and maintaining fidelity to, the Net Zero plan.”
Reed Scott-Schwalbach,
President, Oregon Educators Association
"The Divest Oregon coalition welcomes the release of this net-zero plan. We appreciate Treasurer Tobias Read’s regular dialogue with our coalition of over 100 organizations who are dedicated to ensuring that our state pension fund invests in a sustainable future with solid returns. The Treasurer agrees with our coalition that the climate risks to PERS investments are real and require a substantial response to protect the pensions of more than 400,000 Oregonians. With the policies outlined in this plan, the Oregon State Treasury is taking an important step forward in considering these risks. But this is just the beginning: the success of this decarbonization effort requires Treasury's commitment to transparent reporting, a sense of urgency, and responsive policy-making as the effects of climate change on investment portfolios are increasingly understood. We look forward to our continued engagement with the current and incoming Treasurer, Treasury staff, and the Oregon Investment Council as they further define and implement these policies.”
Andrew Bogrand,
Communications Director, Divest Oregon
Contacts
Eric Engelson
Public Information Director
Oregon State Treasury
503-373-7609
Public Information Director
Oregon State Treasury
503-373-7609
Kasey Krifka
Oregon Savings Network
Oregon State Treasury
503-431-7976
Oregon Savings Network
Oregon State Treasury
503-431-7976
