OPRI weighs in on fossil fuel divestment bill
OPRI offered testimony on bill that would require the Oregon State Treasury to divest from certain fossil fuel investments has been introduced for the 2023 session.
HB 2601 would change the way the Treasury invests Oregon Public Employee Retirement Funds (OPERF), directing them to exit from certain carbon-intensive investments and modify future investment options. Supporters of the bill say the Oregon Public Employee Retirement Fund should be leading by example and should not be funding fossil fuels or contributing to climate change with its investments. Meanwhile, opponents of the bill say that HB 2601 will lead to lower investment returns for the Public Employee Retirement Fund, lower benefit levels for retirees, and a higher unfunded liability for the PERS system.
OPRI recently conducted a survey to find out where members stand on this bill. Of the 546 members surveyed, 24% of the membership supports HB 2601 at this time, while a majority – 56.1% – oppose the legislation. These finding were shared with the House Committee On Emergency Management, General Government, and Veterans at the public hearing on February 16, 2023.
In written testimony submitted to the committee, J.L. Wilson, legislative counsel for OPRI, stated, “There is very strong sentiment among the membership that PERS investments should be focused on maximizing returns and maximizing benefit levels. The reality is, with a $33,000 average pension benefit, retirees don’t have the luxury of lesser investment returns.:
HB 2601 has received criticism from State Treasurer Tobias Read. In a letter to the legislature on January 18th, Read pushed back on the bill, stating that restrictions on Treasury investments in statute would likely lead to reduced returns and benefits to the OPERF and ultimately mean an increase in the unfunded liability. He also pointed out that current investment strategies are working, as returns have been beating expectations and have been resilient.
Read has expressed his desire to see the pension fund decarbonize investments. In November 2022, he released his framework for decarbonization, setting a goal of reaching 50% decarbonization by 2035 and “net zero” by 2050.
Discussions around fossil fuel investments have been gaining momentum the last few years. During the 2022 legislative session, HB 4115 was introduced to require the Oregon Investment Council to publish a complete list of all assets held in investment funds. The primary purpose of HB 4115 was to evaluate the financial risk associated with fossil fuel investments. The bill passed the House, but ran out of time to be considered by the Senate during the short session.