Less than a year ago, Oregon’s former state treasurer pledged to make the state employee pension fund net zero by 2050. Now, the new state treasurer is seeking legislation to continue that work through careful investments.
House Bill 2200, introduced by Oregon State Treasurer Elizabeth Steiner, would create pathways to slowly reduce Oregon’s Public Employees Retirement System’s 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.
FILE Oregon state Treasurer Elizabeth Steiner at the state Capitol on Feb. 5, 2024, in Salem, Ore.
Kristyna Wentz-Graff / OPB
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’s PERS funds, “which is why Treasury set the Net Zero goal,” Steiner wrote in testimony she intended to submit Tuesday to the House Committee on Emergency Management, General Governance and Veterans. “Going 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.”
The bill stems from former State Treasurer Tobias Read’s “A Pathway to Net Zero” 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’s proposal to incorporate the state’s climate goals into PERS investment choices.
Currently, PERS’ 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’s her job to ensure benefits are paid — and to reduce the burden on current public employees paying into the fund.
“The 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 — soon being a somewhat squishy term — going to make carbon intensive investments not profitable,” she told OPB. “As fiduciaries, it is our job to be aware of that and pay attention and look at changes in markets and adjust our portfolio’s holdings.”
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’s carbon footprint and increase green energy investments over an extended amount of time.
According to the “A Pathway to Net Zero” plan, the goal is to cut the portfolio’s carbon emissions by 60% by 2035 and reach net zero by 2050.
“The problem is that, for some people it’s hard to dissociate divesting from carbon-intensive businesses, because it’s a smart thing to do as a fiduciary of a pension, fund versus divesting from fossil fuels or other carbon intensive businesses because it’s the right thing to do for the climate,” she said. “…We are doing this bill because it is the right thing to do to protect the pension fund.”
But change won’t 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.
“As state treasurer, with my investment team, I have to pay attention to market forces,” she said. “So, we may do things a little differently in the next 4 years than we might have done if we had a different federal administration.”
Overall, Steiner said, the bill is about being prepared to respond to market changes and the “inevitability that carbon-intensive businesses won’t be as profitable, and greener alternatives, climate-friendly investments will be.”
“It’s laying it out in statute, with open transparent reporting, so that everybody’s clear what we’re doing and why we’re doing it,” she said. “We’re doing it to protect the pension fund, we’re doing it to protect retirees, we’re doing it to protect current public employers, and we’re doing it in a thoughtful, clear way so that we don’t take unnecessary risks with our pension fund.”
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.
A public hearing for the bill is set for 1 p.m. Tuesday.