In conversations with stakeholders, the Oregon Investment Council, Treasurer Read, and Treasury staff often get asked why the Oregon Public Employees Retirement Fund has holdings in fossil fuel companies, especially when the effects of climate change are already being felt here in Oregon.
Decisions about OPERF and how it’s invested must meet state law, which requires us to prioritize long-term, risk-adjusted investment performance above everything else. OIC members are fiduciaries of the fund – their job is to make decisions that earn returns for the pension fund’s beneficiaries. Decisions that put political or social goals first are not allowed, which is understandable when not every Oregonian would agree about what those decisions might be.
What is allowed – and what guides Treasury’s work when making investment decisions – is better understanding ALL factors that influence and affect the long-term soundness of a particular investment.
For OPERF that means:
- Formalizing the evaluation of environmental, social, and governance factors into our decision-making. We evaluate our managers on everything from the diversity of their leadership team to how well they understand and integrate climate mitigation and adaptation.
- Better understanding real-world risks across our asset classes. OPERF investments include a lot of real estate, and we’ve added a climate lens to see how the effects of climate change may affect those properties.
- Measurably increasing our holdings in renewable energy. Between 2014 and 2021, our investments in renewable energy increased from $50 million to more than $800 million.
- Using our seat at the shareholders’ table to advocate for positive change. If we sell stock in a company, that stock doesn’t go away, and there’s a chance that it gets picked up by owners who are less engaged and committed to strong corporate governance.
Our PERS obligations are long-term. Every decision we make is intended to support the long-term viability of the retirement fund for beneficiaries now and well into the future. This means that we don’t approach our holdings focused on one-day issues or even one-year issues: we’re thinking about the 20- and 30-year issues. That’s not so different than how a lot of us look at environmental issues: what we do today has effects 30 years down the line for the planet. We’re very much aware of that as we evaluate investment opportunities, how our investments are allocated, and where we believe we can generate risk-adjusted returns for retirees to meet the obligations the state has to public employees.
Managing risk is one of the key responsibilities of OIC and the Treasury investment team, and there’s no greater risk to Oregon than climate change. Changes to the fund are not going to happen as quickly as some people want. But change is happening, with results that support responsible investing and reflect long-term thinking.
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