The Oregon Treasury is being urged by Democratic politicians and environmentalists to halt new pension investments in private assets and private equity groups that have staked in fossil fuel companies and projects.
If more than 10% of the private equity fund is engaged in fossil fuel companies or heavy consumers, the Pause Act would impose a five-year freeze on future private equity investments made with Public Employee Retirement System, or PERS, funds. According to its principal supporters, Sen. Jeff Golden, D-Ashland, and Sen. Khanh Pham, D-Portland, it is intended to redirect the state’s $100 billion in PERS assets away from hazardous fossil fuel investments associated with global climate change.
The COAL ACT, which was passed in 2023 and requires the Treasury to sell its assets in publicly traded companies that get 20% or more of their earnings from coal production, is one piece of recent legislation that Golden and Pham have supported to shift the Treasury away from fossil fuel investments.
Golden stated in a news release that now is the moment to stop throwing good money after bad investments and to provide our hardworking Treasury personnel the freedom to better align investment practices with new knowledge on the dangers to these funds.
The act, Senate Bill 681, would assist the Treasury in achieving its Net-Zero Plan objectives, which include a 60% reduction in PERS investments in businesses that release toxic substances by 2035. Supported by former Treasurer Tobias Read, the strategy sought to achieve net-zero emissions by 2050, which entails finding a balance between investments in high carbon-emitting businesses and those that are reducing, absorbing, or pledging to reduce emissions.
Treasury pledged to achieve net-zero
The goals of the Pause Act are being incorporated into a larger Treasury bill that would codify the Net-Zero Plan into law, according to spokespeople for Elizabeth Steiner, the new state treasurer. Her staff is collaborating with Golden, Pham, and advocates from the nonprofit Divest Oregon, a coalition of organizations that have long pushed the Treasury to stop investing in fossil fuels.
According to an email from agency spokesperson Robb Cowie, Treasurer Steiner is totally dedicated to achieving Oregon’s objective of achieving net-zero emissions from PERS investments by 2050 and protecting Oregon retirees from the threats that climate change poses to the public employee retirement fund’s value.
According to Cowie, Steiner has not yet expressed a view on Senate Bill 681, but he is worried that a hasty withdrawal from some private equity funds would raise PERS’s unfunded debt, which is currently around $29.4 billion.
According to Cowie, we have been having deliberate and candid conversations about how to achieve the net-zero goal with lawmakers, labor leaders, and others.
The Divest Oregon bill’s proponents claim that in addition to addressing climate change, it will assist the Treasury in reducing the dangerous and excessive amount of its assets that are invested in private equity.
Over 166,000 current retirees are served by PERS, which has about 28% of its money invested in private equity funds, which are pooled investments in privately held businesses. According to Public Plans Data, a nonprofit research consortium based at Boston College’s Center for Retirement Research, that is more than twice the average of comparable state pension systems. According to pension and divest monitoring organizations like the Chicago-based Private Equity Stakeholder Project, this puts the PERS system under serious peril.
Real assets, including investments in commodities, infrastructure, and natural resources, account for an additional 10% of PERS funds. The PERS portfolio’s emission-related investments, which include investments in oil and fracked gas, are mostly made up of real assets and private equity. It’s not always obvious where money is going because private equity investments aren’t held to the same transparency standards as publicly traded businesses and investments.
Jennifer Schramm, co-lead at Divest Oregon, stated in a statement that private investments are risky, covert, and extractive. The Pause Act allows Treasury staff to examine more labor-aligned, business-friendly, and climate-safe investments while addressing the massive danger to the climate and the portfolio of private investments in fossil fuels.
— Oregon Capital Chronicle’s Alex Baumhardt
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