Bill Calls for Oregon to Divest From Fossil Fuels

State treasurer Tobias Read says the proposed legislation would lead to lower returns and higher employer contribution rates.




Citing a 2021 state treasurer’s report that showed that Oregon’s investments are at “significant risk under current investment strategies,” state lawmakers have introduced a bill that would require the Beaver State to exit certain carbon-intensive investments, subject to fiduciary duties.

However, the proposed legislation has received pushback from State Treasurer Tobias Read, who warns that some of the provisions of the bill would lead to lower returns and higher employer contribution rates for the state’s public pension funds.

HB 2601, the Treasury Investment and Climate Protection Act, would prohibit the state’s treasury from making any new investments in fossil fuel companies. It would also require the treasurer to sell all publicly traded stocks listed on the Carbon Underground 200, which is a compilation of 100 coal and 100 oil-and-gas publicly traded reserve holders worldwide, ranked by their reported reserves’ potential carbon emissions. The state treasurer would also be required to issue periodic reports on actual and planned progress toward the completion of duties imposed under the proposed bill.

If passed into law, the treasurer, with approval of the Oregon Investment Council, will have no more than one year to develop a plan to “protect investments held in investment funds from transitional and physical climate risks, including sea level rise, wildfires, flooding, drought, increased greenhouse gas emissions and energy transition impacts,” the bill states. The treasurer and OIC would also be required to solicit and consider public input given at public hearings when developing the plan, which would also have to be updated yearly.

But Read, who in November pledged to decarbonize the state’s retirement system by 2050, wrote in a letter to state lawmakers that the bill’s requirements, “no matter how well-meaning,” will almost certainly lead to a reduction in investment returns and benefits for the Oregon Public Employees Retirement Fund. He also noted that lower returns would mean an increase in the pension fund’s liability and could potentially erode its funding status.

“Legislation that imposes blanket or even targeted restrictions on how or where Treasury can invest will affect these numbers and would mean that funding retirement incomes is no longer the sole purpose of OPERF,” Read wrote in the letter. “Claims that limiting Oregon’s investment choices through statute will automatically or easily be revenue-neutral or yield higher returns are pure fiction.”

He also said that if the pension fund is not “investing for the sole benefit of OPERF beneficiaries,” that it will open the door to lawsuits and could threaten the retirement system’s tax-exempt status, “while breaking beneficiaries’ trust in our stewardship of their personal retirement dollars.”

The bill’s backers argue that factoring climate risk into investment decisions is, indeed, investing for the sole benefit of the pension fund participants.

“This bill is about ensuring the long-term health of our state’s investments,” State Rep. Khanh Pham, one of the bill’s three sponsors, said, according to the Willamette Week. “It’s about making our state and its residents more resilient to the climate crisis.” 


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