Oregon State Treasurer Tobias Reed will submit a plan to reduce the emissions intensity of the agency's investments to the Oregon Investment Council on February 6th.
In a new report, Reed says he aims to reduce the emissions intensity of investment portfolios (measured in tonnes of CO2 emissions per $1 million in assets under management) by 60% by 2035 and to net zero by 2050. Outlined the plan.
The Treasury Department worked with a consultant to use the 2022 Oregon Public Employees Retirement Fund portfolio as a baseline for cuts. The portfolio was worth $91.9 billion, but was reduced for some investments that were short-term or poorly managed by the Treasury and required changes. This left $73.2 billion, or 80% of the total Treasury holdings, subject to emissions reduction commitments.
The agency has set emissions reduction targets similar to those planned by other large pension funds in California, New York and Canada, in response to international agreements to combat climate change.
“We aim to reduce our emissions intensity by 60% by the interim deadline of 2035. This equates to a 50% reduction in absolute emissions and is broadly in line with targets and dates set by our industry peers.” says the report. After reaching interim cuts, the Treasury plans to reach net zero by 2050.
The company plans to do so through a combination of strategies. Broadly speaking, they include investing in companies with their own net-zero plans, increasing investment in green energy and reducing or not investing in companies that generate emissions. It will be done.
Here's a snapshot of our 2021 portfolio from these approaches:
“By prioritizing strategies that support transition and decarbonization, we are not simply shifting the burden of emissions onto other investors, or are simply putting money on paper while doing nothing to mitigate climate change in any meaningful way.” “Avoid trying to make numbers look good,” the plan says.
Climate change activists are calling on Reid, who is currently running for secretary of state but is not seeking term-limited re-election, to take aggressive action to decarbonize pension investments. Their argument is persuasive. The world is getting hotter, with all sorts of implications for Oregon and all people now and in the future.
At the same time, Reed and the Oregon Investment Council are responsible for maximizing the benefits of the Oregon Public Employees Retirement System's 405,000 members. It is the responsibility of trustees to do so, and as the report points out, the risk of lower returns not only hurts pensioners, but also increases the amount government employers have to set aside.
“A hasty implementation of a net-zero plan that would reduce returns on investment would mean an increase in OPERF's unfunded liability. A larger unfunded liability would require more contributions from employers and their employees. “will be required,” the report says. “When public entities have to spend more money to cover retirement plan obligations, there is less money available for classrooms, fire departments, child welfare offices, and other state and local services.”