Salem, OR – Oregon lawmakers, alongside environmental advocates, are urging the state Treasury to take immediate action on its pension investments by halting new investments in private equity funds and assets tied to fossil fuel companies. The proposed legislation, Senate Bill 681, also known as the “Pause Act,” seeks to implement a five-year moratorium on new investments in private equity funds where more than 10% of the assets are linked to fossil fuels, including oil, gas, and coal.
The bill’s sponsors, Sen. Jeff Golden, D-Ashland, and Sen. Khanh Pham, D-Portland, argue that this pause is necessary to reduce the state’s $100 billion Public Employee Retirement System (PERS) investments in industries that contribute to climate change and put the long-term value of the fund at risk. The proposal comes as part of broader efforts to ensure that Oregon’s public pension system aligns with its climate goals.
Golden and Pham are also behind the COAL Act, passed in 2023, which directs the Treasury to divest from publicly traded companies generating 20% or more of their revenue from coal production. Golden emphasized the need for a strategic shift, stating, “This is the right time to stop throwing good money after bad investments and give our dedicated Treasury staff the latitude to better align investment practices with emerging research on the risks to these funds.”
The Pause Act aligns with Oregon’s broader climate agenda, particularly its Net-Zero Plan, which aims to achieve a 60% reduction in harmful emissions from PERS investments by 2035 and reach net-zero emissions by 2050. The plan, which was first introduced under former Treasurer Tobias Read, strives to balance investments in carbon-intensive industries with those in cleaner, more sustainable sectors.
Currently, a significant portion of PERS funds are invested in private equity and real assets. Approximately 28% of the fund is allocated to private equity, which involves investments in non-publicly traded companies, a level that exceeds the average of other state pension systems. Critics argue that this concentration exposes the fund to higher levels of risk, particularly in sectors like fossil fuels that are facing increasing pressure from climate change concerns and shifting market dynamics.
Advocates, including those from Divest Oregon, warn that these private equity investments, along with an additional 10% invested in real assets such as infrastructure and commodities, could have long-term detrimental effects on the fund. They argue that many of these investments are opaque, making it difficult to track where the money is going or assess its climate impact. Jennifer Schramm, co-lead at Divest Oregon, described private equity investments as “extractive, secretive, and risky,” adding, “The Pause Act gives Treasury staff the time to address the enormous risk to the climate and to the portfolio of private investments in fossil fuels.”
In response, new State Treasurer Elizabeth Steiner’s office has expressed a commitment to Oregon’s net-zero goals. However, officials have raised concerns that an abrupt divestment from fossil fuel-heavy private equity funds could exacerbate the state’s unfunded pension liability, which currently stands at about $29.4 billion. Robb Cowie, a spokesperson for the Treasurer’s office, emphasized that discussions are ongoing with lawmakers and other stakeholders to find a balanced approach that reduces emissions while protecting the financial health of the pension system.
As lawmakers debate the merits of the Pause Act, the conversation around climate-conscious investing continues to evolve, reflecting growing concern over the intersection of environmental sustainability and financial security. For Oregon, the stakes are high, with over 166,000 retirees depending on the stability of the state’s pension fund, and an uncertain future for investments tied to fossil fuels.
