Oregon’s legislature passed a bipartisan bill that aims to reduce the risks of climate change for the state’s $101 billion Public Employees Retirement Fund. The Climate Resilience Investment Act will be managed by the Oregon Investment Council and the state treasurer, which both oversee the investment and allocation of all State of Oregon trust funds, including the pension fund.
Under the bill, the OIC and the treasurer are required to report on and analyze the risks of the Scope 1 and Scope 2 emissions of fossil fuel investments within the fund. Scope 1 emissions refer to emissions that come from sources a company owns or controls directly, while Scope 2 emissions are produced by energy used by a firm.
The bill calls for detailing the integration of climate change analysis, as well as reducing the carbon intensity of the fund, with investments intended to reduce net greenhouse gas emissions. It also includes providing a report to the legislative assembly every two years on the progress of minimizing climate change’s impact on the investment portfolio. Additionally, the report will discuss advancements and methodologies that aim to measure progress toward goals and benchmarks.
“The expected global economic shifts due to a rapidly changing climate call for investment solutions that are likely to encourage a transition to a net-zero future,” the bill states. “Fluctuations in federal policy and market trends can have a long-term impact on an investment strategy to address the financial risks related to a changing climate.”
Want the latest institutional investment industry?news and insights? Sign up for CIO newsletters. ?
The bill also cites the “increasing frequency and severity of extreme weather events” that “pose significant risks to infrastructure, operations and supply chains across multiple sectors.”
According to the Oregon State Treasury, OPERF’s fossil fuel investments accounted for approximately 3.7% of its holdings, as of 2021.
“The Climate Resilience Investment Act is a clean energy investment law, not a divestment mandate,” Oregon Treasurer Elizabeth Steiner said in a statement. “The Climate Resilience Investment Act protects employee retirement funds by enabling Treasury’s investments to take full advantage of the opportunities the clean energy transition creates.”
Steiner cautioned that losses from investments in fossil fuel-producing companies could lead to worsening unfunded liabilities for the state’s pension fund. She said this could reduce available funding for state programs, local agencies, school districts and other public entities.
The legislation will be sent to Oregon Governor Tina Kotek, who is expected to sign it. The law will take effect 91 days after its passage.
Related Stories:
Oregon Bill Would Ban State Pension Investments in Private Markets Funds Invested in Fossil Fuels
Oregon Pension Publishes Inaugural Progress Report on Net-Zero Plan
Oregon Plans for Net Zero Portfolio by 2050
Tags: carbon risk, Climate Change, Oregon Investment Council, Oregon Public Employees Retirement Fund (PERF)
#Oregon #Passes #Bill #Manage #Climate #Change #Risks