In his last year as Oregon state treasurer, Tobias Read is proposing a roadmap to make the state’s $100 billion pension fund carbon-neutral by 2050.
Read previewed his “net-zero plan” Thursday at a meeting of the Legislature’s Emergency Management, General Government and Veterans committee, the day after environmental groups visited the Capitol to promote another bill that would divest the state’s Public Employees Retirement System, or PERS, of its coal investments.
The state’s retirement fund serves about 400,000 current and former public employees. Of the $100 billion in the fund, more than $5 billion is invested in fossil fuel companies, according to a recent analysis from the nonprofit environmental coalition Divest Oregon. That’s not including investments in private equity funds, which the group did not review because the funds are not subject to public disclosure laws.
Divest and other environmental groups have for several years pressured Read to divest the fund from fossil fuels and to stop investing in fossil fuel companies, and Read has responded that his job is to guarantee returns on investment for the state’s public employees.
Read’s net-zero plan was developed in partnership with global consultancy McKinsey and Company at a cost of $1.9 million, according to a copy of the agreement obtained via public record’s request by Rick Pope, a volunteer with the nonprofit environmental coalition Divest Oregon.
Read’s office declined to send a draft of the net-zero plan in advance of Thursday’s meeting, but shared his 11-page presentation to the legislative committee. Eric Engelson, public information officer for the treasurer’s office, said they hope to have the plan ready for distribution by Jan. 31. The plan is not to divest the state’s retirement fund of all fossil fuel holdings and investments in carbon-emitting industries, but to balance any investments in those companies and industries with investments in enterprises that cut or absorb emissions.
“It is not that we are not going to have carbon emissions in our portfolio. We will. I don’t think it’s possible to avoid that,” Read told the committee Thursday. “What we are seeking is a position where those emissions are balanced by the planet’s ability to absorb them naturally and with technological solutions.”
Read will present the proposal to five members of the Oregon Investment Council on Feb. 6, for consideration. Read is a member of the council as treasurer. After the council weighs in, the plan will go to the Legislature for consideration during the February session. Lawmakers would decide over several sessions whether to provide the resources to implement it in the coming years, according to Read.
Read projects an “implementation period” of four years, beginning in 2024, and that by 2028, the state treasurer’s office would shift some investments away from fossil fuel companies and industry’s with heavy emissions, and into investments that support a reduction in greenhouse gas emissions.
“I expect that the next treasurer, whomever she or he is, may well be in front of you and your colleagues requesting the authority for additional brains to do this work,” he told the Legislative committee.
Read’s term as treasurer officially ends in January 2025. He is running for secretary of state and currently faces Sen. James Manning, D-Eugene, for the Democratic primary May 21. A Republican, property broker Brent Barker is also running.
In beginning to move towards a net-zero portfolio now, Read is acknowledging that some fossil fuel investments have actually become more risk than reward, according to Pope.
“We and the treasurer agree now that climate change is a threat to PERS investors,” Pope said.
The COAL Act
Divest Oregon is behind a separate proposal to move state investments away from fossil fuels by targeting coal. The Clean Oregon Assets Legislation, or COAL Act, is sponsored by Rep. Khanh Pham, D-Portland, Sen. Jeff Golden, D-Ashland, and Rep. Mark Gamba, D-Milwaukie. It would direct the treasury department to divest the state retirement system of its holdings in companies that mine and burn coal. Divest has identified about $1 billion of the fund’s investments in the coal industry. Divest members visited the Capitol on Wednesday to talk with lawmakers in advance of the February session.
The act is modeled after a similar policy in California passed in 2015. The California agency that oversees the state’s retirement fund estimates that divesting from coal during the last eight years has contributed to nearly $600 million in gains to the fund, according to a presentation from Divest Oregon.
The act’s sponsors have also modeled it after a 2005 Oregon law that directed the treasury to divest from companies doing business in Sudan following a declaration from the U.S government that the Sudanese government was participating in genocide.
Advocates note that Oregon state leaders voted to phase out coal as an energy source in 2016 because it’s among the most polluting sources of energy. Oregon was the first state in the U.S to pass legislation phasing out coal. Utilities have until 2035 to ensure the electricity they provide is coal free. Divest said the state’s public employees retirement fund should do the same.
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