Oregon State Treasurer announces investing principles

Oregon State Treasurer, Elizabeth Steiner, published four investment principles on October 21st that will inform her decision-making as a Council member at the $95 billion Oregon Public Employees Retirement Fund (OPERF) regarding the decision by the five-member council to revise its asset allocation goals for 2026. These principles are: 

• Principle 1: A diversified portfolio is a good strategy that balances returns and risks over the long-term.
• Principle 2: The OPERF portfolio must be structured to find opportunities in the market conditions of today and the future, not yesterday.  Includes a reduction in the private equity allocation. 
• Principle 3: A clean energy future is coming, and Treasury can adapt its investment strategies to take advantage of the profitable opportunities in this growing sector.  Includes investment in climate positive technology, the Climate Resilience Investment Actand the Treasury’s Net Zero plan
• Principle 4: Engagement with beneficiaries is a necessary and critical part of the work to support OPERF over time and in perpetuity.

PESP applauds the Treasurer for her leadership in pursuit of meaningful steps to reduce OPERF’s current over-allocation to private equity and continued progress toward making meaningful climate progress through her support of the Net Zero Plan.

OPERF’s overall returns have been dragged down by the pension system’s over allocation to private equity, according to the fund’s investment consultant. OPERF’s $95 billion private equity portfolio has posted disappointing returns, underperforming its own benchmark when measured over 1-, 3-, 5-, and 10-years.

These investment principles build on the Treasurer’s work earlier this year to formally endorse a sustainable investing plan for the state pension by championing  theOregon Climate Resilience Investment Act which became Oregon law this summer. This landmark legislation is a testament to the growing understanding that climate change poses a significant financial risk and that safeguarding public employee retirement funds means shifting investments away from fossil fuels and toward a clean energy future. The law directs the Oregon Investment Council and the State Treasurer to manage the risks of climate change to OPERF through analyzing and reporting the Scope 1 and Scope 2 emissions of the fund’s fossil fuel investments and preferring investments that align with the energy transition to reduce the carbon intensity of the fund. PESP testified in support of the bill, emphasizing the urgent financial imperative of ending investments in high-risk fossil fuels and seizing the opportunities to invest in the clean energy sector. 

PESP has been deeply engaged in Oregon for years, advocating for thoughtful and robust management of climate-related financial risks poised by OPERF’s private markets portfolio, including testifying at the Oregon House of Representatives in 2023, proactively engaging with then-Treasurer Read’s Net Zero Plan, and providing regular public comments to the Oregon Investment Council to educate and provide resources on the risks of continued private market fossil fuel investments and to highlight the opportunities shifting their portfolio to just transition-aligned investments can have for both the climate and Oregon pensioners and their families.

PESP is excited to see the continued leadership from Treasurer Steiner and looks forward to continued progress towards transparency and meaningful progress on managing climate-related financial risks at OPERF.