New York City and State have both set a 2040 Net Zero target date, having already completed significant fossil fuel divestments. With the world already having passed the Paris goal of holding temperature increases to 1.5 degree centigrade, funds with earlier climate risk mitigation targets are likely to protect funds more effectively than funds with later targets. Unfortunately, Oregon Public Employees Retirement Fund (OPERF) has set a less aggressive target Net Zero emissions date of 2050.

All but two of the plans reference the need to incorporate principles of a just transition in their investment frameworks, particularly as part of investor engagements. But none offer time-bound demands or specific exclusion criteria for investments. Climate change increasingly and disproportionately impacts vulnerable communities and larger parts of the globe. Pension funds, including OPERF, urgently need to move from “principles” to “practice.” Oregon has the opportunity to be the leader in moving just transition principles into practice.

Stopping new investments in fossil fuels is fundamental to any credible net zero plan. New York State and New York City pension funds both divested from selected publicly traded fossil fuel companies beginning in 2019. Both funds have also recently excluded new private market investments in the production, exploration, or extraction of fossil fuels. New York City funds have further proposed excluding private investments in midstream and downstream fossil fuel infrastructure. OPERF only requires public market investments in fossil fuel companies to have a “credible transition plan.” Private market funds are only restricted from investing “primarily” (undefined) in fossil fuels. Oregon can improve its net zero plan by creating more robust investment criteria, including what qualifies as a "credible" transition plan and exactly how much fossil fuel investment is allowed in private market funds.

Most of the plans have climate aligned investment targets. However, the definition of “climate-aligned investments” remains unclear in these plans, as does the rationale for the target dates and whether they will provide sufficient “climate proofing” to protect returns. Oregon’s Net Zero Plan calls for: 

• increasing investment in “climate positive” holdings by 2035, 
• increasing public investments that will contribute to a clean energy transition, 
• tripling climate aligned investments in Real Assets and Private Equity asset classes, and 
• ensuring that most emissions from real estate and private equity asset classes are covered by a credible net zero plan. 

A significant problem for Oregon is that 60% of its portfolio investments are “private." Thus, there is no way for the public to know the exact nature of the “climate aligned” investments counted toward the targets. While Oregon statute protects private investments from disclosing specific investments, aggregate reporting is possible and would significantly improve transparency.

The New York City Plans (NYCERS/NYCTRS) and New York State Common Fund (NYSCF) are clear leaders in divestment from fossil fuel companies. NYCERS and NYCTRS have divested from $3.6 billion in publicly traded fossil fuel companies; New York State from 31 coal, 14 shale oil and gas, and 5 oil sands companies. Legislative action in California and Oregon have forced their funds to divest from selected “thermal coal” investments. Oregon is currently reviewing carbon-intensive publicly traded companies for their “transition readiness,” with no commitment to divest.

The New York City funds both have the most comprehensive reporting and transparency with annual public reports, including dashboards that allow the public to monitor progress. Oregon has committed to annual public updates of actions taken to implement or adjust its Net Zero Plan, as well as biannual emissions data. Oregon's 2024 net zero plan annual report has been published.

CalPERS is a leader and member in climate-focused investor groups and coalitions. It serves as co-chair of the Human Capital Management Coalition and as a co-founder on the steering committee for Climate Action 100+ and has taken the pledge of the UN Net Zero Asset Ownership Alliance. 

• Oregon PERS has minimal memberships in climate-focused investor shareholder groups, no leadership roles in those they do belong to, and a weak statement about future engagement with such groups.
• OPERF also stands out as the pension fund with the lowest percentage of investments in public equity — companies in which shareholders and their proxies can vote to influence company governance and policy. Where other state funds (such as CalPERS) have 41-42% in public investments, reflecting the national pension plan average, OPERF has but 16%. (Around 60% of OPERF is in private investments, where the fund has no vote over investment policy.) “Shareholder engagement,” as a cornerstone of the Oregon Net Zero Plan, is likely to have little impact on industry behavior because they have proportionally so little investment in the public market holdings.
• Rebalancing the OPERF portfolio toward OIC investment policy targets is not only fiduciarily responsible, but will also increase Oregon's ability to assert meaningful investor engagement.