Decarbonization of the PERS Investment Fund: HB 2200 & SB 681

Discussions on ‘decarbonizing’ the PERS Investment Fund (OPERF) have gained momentum in recent years. This session has produced two bills—House Bill 2200 and Senate Bill 681—sparking debate over the balance between the perceived risk of investments tied to fossil fuels and financial performance.

House Bill 2200 – proposed by State Treasurer Elizabeth Steiner (D) – aims to address climate-related financial risks in Oregon’s investment portfolio by directing the Oregon Investment Council to prioritize clean energy investments and reduce carbon emissions in alignment with the state’s climate goals. However, the bill stops short of mandating this approach and requires the Treasurer to only make those investments if they are in line with legal fiduciary requirements.

OPRI urged caution on this approach as OPRI members have made very clear that their highest priority for PERS investments is to maximize returns for retirees.

Meanwhile, Senate Bill 681 goes much further than House Bill 2200 and proposes a five-year moratorium on investments in private market funds with fossil fuel exposure. Supporters believe this would protect state funds from fossil fuel market volatility and align with climate-conscious policies. Opponents, including OPRI, argue that restricting fossil fuel investments could limit diversification and lower returns, potentially affecting public services and pensions.

Oregon Treasurer Elizabeth Steiner strongly supports HB 2200 but opposes SB 681, citing concerns over financial risks and fiduciary duties to maximize returns for PERS beneficiaries. Most labor organizations also supported HB 2200 while opposing SB 681.

OPRI was critical of both bills, but recognizes that HB 2200 was the preferable approach.

A recent survey of OPRI members revealed strong sentiment that the PERS Investment Fund should be managed primarily to maximize returns. OPRI will continue to monitor these bills.  As it stands now, we believe that HB 2200 will most likely pass.  We do not believe that SB 681 will pass at this time.