Two Years In The Making - Oregon Treasury Releases Decarbonization Plan
Photo Credit: Sandra Seitamaa
Treasurer Read's Decarbonization Plan is a critical milestone in protecting the Oregon Public Employees Retirement Fund (OPERF) from the systematic risk of climate change and the probability that global warming will surpass the Intergovernmental Panel on Climate Change's projected safe boundaries (Synthesis Report Climate Change 2023).
The Oregon Treasury has embraced the financial opportunity of being part of the solution. It is showcasing how a pension fund can use its tools to protect its workers' retirement future and tackle the systemic risks of climate change. We applaud the specifics:
Aligning external asset managers with climate goals through due diligence and data. (This is especially important since a large portion of the fund relies on external asset managers.)
Increasing the percentage of climate- or transition-aligned Public Equity holdings.
Excluding new investments in private market funds that intend to invest primarily in fossil fuels.
Increasing the share of portfolio emissions covered by credible net zero transition plans. (The lion's share of the plan's financed emissions – estimated at 9.5% – comes from natural gas and oil extraction, most of which is within Real Assets.)
However, challenges remain, notably from the Oregon Investment Council, which indicated that a separate analysis may be necessary and new policies are required. We will pay attention to how the next state treasurer will respond to these challenges and integrate environmental data into risk and return analyses. We have two critical questions: (1) How will the Treasury and the fund assess relevant environmental datasets, and (2) how will the investment staff integrate environmental data into their standard processes for analyzing risk and return?
CFA is grateful to play a role in the collective efforts over the past couple of years that have paved the way for this progress. Two key ingredients played essential roles in achieving this progress:
1. Supporting the growing voice, capacity, and influence of union leadership and workers to whom the fund is accountable.
Recognizing local SEIU 503 as an invested local union with an important and influential voice, we saw our role in supporting their growing engagement via support on policy options, pension finance system education, plan analysis, and how to engage other state unions. They hit the ball out of the park, showcasing how effective strategic engagement can be. Shout out to them for successfully engaging with the Treasurer's office to ensure the Decarbonization Plan included three key demands: shift investments away from high-emitting, high-risk companies, much greater transparency, and more substantial guidance and accountability for the fund's asset manager.
2. Fostering dialogue across varying perspectives to uncover where to align on specific and mutual opportunities for wins, even people with whom you may not agree on all asks and engagement strategies.
This happened on a few key fronts: SEIU 503 – tapping resources from us and our key collaborator, the Private Equity Stakeholder Project (PESP) – creating spaces for shared learning, coordination, and collaboration among fellow public employee unions with varying views to make sure workers were part of the plan's creation. 503, PESP, Climate Finance Action, and others worked with the Treasury and investment stewardship to ensure genuine space to hear and engage with workers. We uncovered a few actual shared interests with other influential voices in the state where divesting from fossil fuels was a demand. All of this boils down to figuring out how we can collaborate to grow power for bold pension solutions collaboratively.
The path for durable change becomes possible when we actively bring together critical voices and perspectives—and work to build concrete pathways for genuine engagement and shared buy-in for pension solutions!
ABOUT CLIMATE FINANCE ACTION
Climate Finance Action (CFA) is a women-led, 501(C)3 non-profit organization equipping stakeholders and decision-makers to leverage the transformative power of publicly-held capital for real-world climate solutions to ensure a just transition to an inclusive economy in favor of people and the planet. With a focus on collaboration, education, and strategic partnerships, CFA has facilitated groundbreaking dialogues, developed comprehensive educational materials, and engaged with numerous stakeholders— educating 8,000+ union leaders and members and advising over 40 state treasurers and pension staff working towards policy reform. Contact us to learn more about our mission and how you can participate in this transformative journey.