A bill to get the Oregon State Treasury to pause new pension investments in private assets and equity funds that are invested in fossil fuel companies received hundreds of letters of support this week, and one powerful letter of opposition.
Senate Bill 681, the Pause Act, would put a five-year moratorium on new private equity investments made with Public Employees Retirement System, or PERS, funds, if more than 10% of the private equity fund is invested in fossil fuel companies or heavy users.
The bill had its first public hearing Wednesday in the Senate Committee on Finance and Revenue. Nearly 300 letters of support were submitted in advance of the hearing and more than 30 — including one from the Oregon State Treasury — were submitted in opposition.
The idea, according to the bill’s chief sponsor Sen. Jeff Golden, D-Ashland, is to ensure the Treasury actualizes its own plan to get the PERS portfolio to “net-zero” greenhouse gas emissions by 2050.
Former state treasurer and current Secretary of State Tobias Read published the plan in February 2024, with the goal of getting PERS out of some fossil fuel investments, stop investing in some fossil fuel funds and companies and increasing investments in industries that are cutting or absorbing greenhouse gas emissions or are committing to doing so.
“We have an opportunity to answer an important question about an important document,” Golden told lawmakers during Wednesday’s hearing. “The question is this: Are we looking at yet one more comprehensive document that will only gather dust on bookshelves around the Capitol? Passing Senate Bill 681, Mr. Chair, is a clear way to say ‘No. We are actually beginning to put this plan into action in careful alignment with the pathway to net zero.’”
But new state Treasurer Elizabeth Steiner and the Oregon State Treasury are opposed to the bill, according to written testimony submitted in advance of the hearing.
“It reduces our ability to diversify our portfolio and maximize returns for the retirees who are beneficiaries of the Oregon Public Employee Retirement Fund,” wrote Jessica Howell, the Treasury’s lobbyist.
Her letter included data showing Treasury’s private investments have had 10-year returns on investment about 2% higher than those from investments in public markets.
Steiner is instead sponsoring House Bill 2200, which would codify the goals of the Net Zero Plan in law, but does not mandate specific ways of achieving them. Senate Bill 681 would mandate the Treasury pause new private investments in specific funds.
Susan Palmiter — co-founder of the coalition of nonprofit advocacy groups Divest Oregon and a chief petitioner of the Pause Act — told lawmakers at the hearing that the Treasury is already backing away from its commitment to end investment in private funds enmeshed in fossil fuels.
“This is in the plan that they hope to implement, but we have no indication that anything has been done in this area. The plan’s been out for over a year,” she said. “This is why we need Senate Bill 681.”
About 28% of the funds in PERS, which serves more than 166,000 current retirees, are invested in private equity funds, which are pooled investments in non-publicly traded companies. That is more than double the average of other state pension systems, according to Public Plans Data, a nonprofit research consortium housed at the Center for Retirement Research at Boston College. This exposes the PERS system to major risks, according to Divest and pension watchdog groups like the Chicago-based Private Equity Stakeholder Project.
Rep. Mark Gamba, D-Milwaukie, testified in support of the bill and took aim at Treasury’s heavy investment in private funds and assets.
Gamba explained to lawmakers that the Oregon Treasury typically commits hundreds of millions of dollars at a time to private fund managers, with investment contracts lasting 10 to 15 years.
“Treasury becomes a limited partner and has no say in what the fund manager invests in. These private investments are secret. Long ago, private investment folks got laws passed in every state that keep the beneficiaries — in this case, Oregon PERS members — from knowing what their retirement money is invested in,” he explained.
Another 10% of PERS funds are wrapped up in real assets, such as investments in infrastructure, commodities and natural resources including fracked gas and oil. This is where the single largest portion of emission-related investments in the state’s pension portfolio are held.
A study, commissioned by the Oregon Treasury in 2021 from the international financial consultant Ortec Finance showed the Treasury’s asset values could decline nearly 40% by 2060 due to the effects of climate change.
— Alex Baumhardt, Oregon Capital Chronicle
The Oregon Capital Chronicle, founded in 2021, is a nonprofit news organization that focuses on Oregon state government, politics and policy.