Oregon Bill Would Ban State Pension Investments in Private Markets Funds Invested in Fossil Fuels

Senate Bill 681 would prohibit the state treasurer from renewing or making investments in private equity or other alternative funds which state an intention to invest in fossil fuels.



Members of the Oregon State Senate have introduced legislation that would create a five-year moratorium on state investments in private equity and other private market funds that invest in fossil fuel companies.
Senate Bill 681, known as the “Pause Act,” introduced this month, would halt such investing for a five-year period.  

The bill, which includes the caveat that its moratorium is “subject to fiduciary duties,” describes funds investing in fossil fuels as those that are making or intend to make investments of at least 10% of their assets under management in companies that are producing, exploring, extracting, transmitting or exporting fossil fuels, as well as companies that maintain or deal in fossil fuel infrastructure, such as pipelines and terminals.  

In February 2024, then-State Treasurer Tobias Read introduced a net-zero plan for the Oregon Public Employees Retirement Fund. That plan required divestments from fossil fuel producers and a tripling of investments in climate-positive holdings in its private market holdings. The treasury released the plan’s first annual progress report in December 2024.  

The proposed legislation largely follows proposals in the treasury’s net-zero plans, which call for the restriction of “new investments in funds primarily focused on fossil fuels” in the fund’s private equity and real assets portfolio. The net-zero plan also requires, as a part of the fund’s 2035 interim target, credible transition plans from companies or assets in the private assets portfolio that derive more than 20% of their revenues from thermal coal, oil sands, shale oil and gas activities.  

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A spokesperson for the Oregon State Treasury says the department will work with legislators this session to cement Oregon’s net-zero investment goals in statute, while reducing the fund’s risk of losses from investments in carbon emitting business.  

“We’ve been having thoughtful and open discussions with legislators, labor leaders, and others on how we reach Oregon’s Net Zero goal,” the spokesperson says. The same spokesperson also says the state treasury—now led by State Treasurer Elizabeth Steiner after Read was elected as Oregon’s secretary of state—is concerned that the legislation, in its current form, could reduce the investment returns of the fund, increase unfunded liabilities for public agencies across the state, and create unintended consequences that could undermine the state treasury’s net-zero goal.  

The Oregon State Treasury seeks to achieve a 60% reduction in portfolio emissions intensity by 2035 from relative to the fund’s 2022 emissions baseline. In the fund’s public equity and fixed-income portfolios, the fund seeks 10% of active and 30% of passive investments to be climate or transition-aligned investments. The fund also seeks 90% of emissions from directly owned properties to have credible net-zero transition plans.  

The fund classifies climate-aligned investments as those “moving the economy to net zero and climate resilience,” per the fund’s net-zero plan. Transition-aligned investments are classified as those aligned with the goals of the 2015 Paris Agreement.  

OPERF managed $100.9 billion in assets as of November 30, 2024. The fund is a significant investor in private equity, with a 27.7% allocation to the asset class. The fund allocates 23.4% of the portfolio to fixed income, 16.3% to equities, 14% to real estate, 10.5% to real assets, 5% to diversifying strategies and 3.0% to an opportunity portfolio.  

Related Stories: 

Oregon Pension Publishes Inaugural Progress Report on Net-Zero Plan 

Oregon Enacts Thermal Coal Divestment Law 

Oregon Plans for Net Zero Portfolio by 2050 

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