The theme of the April 2 2024 Divest Oregon forum for the Oregon State Treasurer candidates was Building a Treasury for Tomorrow . Treasurer Candidates Jeff Gudman and Senator Elizabeth Steiner participated in the forum held at First Unitarian Church of Portland. Divest Oregon was pleased to welcome about a hundred to the in-person audience at the forum and the same number online. Alex Baumhardt of the Oregon Capital Chronicle was the moderator and drew from questions submitted by the audience. Candidate Republican Brian Boquist was invited to participate, but declined. The moderator referenced two recent Divest Oregon wins: Treasurer Read’s Net-Zero Plan for the Oregon Treasury and the 2024 COAL Act (HB 4083) encouraging the Treasury to stop investing in coal, phase out of current coal investments, and annual reporting on those actions. The candidates were asked about their plan to get PERS to net zero emissions. Senator Steiner congratulated Divest Oregon for pushing to get Treasurer Read to formulate a net zero plan and noted the plan’s failure to include scope 3 emissions (author’s note: for example the emissions from burning coal as opposed to Scope 1 emissions from mining coal). She indicated confidence in her ability to discern greenwashing, or the shading of the truth, by companies in which the Treasury has invested. Jeff Gudman approved of the shareholder engagement with fossil fuel companies included in the plan. He pointed out that the increase in green investing in the plan simply tracks market projections and noted, “We can do better.” In addressing the lack of transparency of private investments, Gudman suggested reporting after a fund closes out of investments made during the life of the fund. He also suggested reporting on categories of investment rather than specific investments. Steiner affirmed having a diverse portfolio with public and private investments. She suggested more transparency in the guidelines for picking private funds and managers. Both candidates said it would not make sense in the long term to invest in fossil fuels, but did not commit to a definition of long term. Senator Steiner said we need to drop fossil fuel investments before “they become less and less profitable.” Gudman said we need to enforce companies’ “standards” through shareholder engagement. Steiner devoted her summary to the toll of financial insecurity and the role of the Treasury in promoting savings plans as well as preserving retirement funds. In his closing statement, Gudman said the Treasury is already doing a good job in managing its existing programs. He touted a second role of the Treasurer: to use the bully pulpit to promote, for example, allocation of kicker dollars or “using carbon credits to address the climate crisis that we are in.” The forum was followed by a candidates’ reception and a celebration of the work and the wins of the Divest Oregon coalition.

The latest Oregon State Treasury (OST) data for June 30, 2023 reveals that when it comes to its fossil fuel holdings in its portfolio, the Treasury is still following a “business as usual” approach. The consequence of this risky business strategy is falling value in its fossil fuel investments. As discussed in the Divest Oregon report, Oregon State Treasury Coal Investment Performance Report , coal prices are dropping and production costs are increasing. This value drop is across all its fossil fuel holding types, as detailed in the January 2024 report by IEEFA , noting a negative outlook for the oil and gas industry. As a result of Divest Oregon making repeated public records requests for data of the Oregon Treasury’s portfolio holdings, starting with the 2021 data, each December the Treasury now publishes information about some of the investments on their web site. Divest Oregon published its methodology last year . Continuing their year on year comparison showed that COAL/GCEL holding value reduced ∼ 30%.

In the Fall of 2023, Divest Oregon’s legislative workgroup faced a dilemma. In the 2023 Legislative session, the coalition’s Treasury divestment bill (Treasury Investment and Climate Protection Act - HB 2601 ) had not made it out of legislative committee. Now we were facing a short session where there simply was not time for the kind of patient politics that might bring more legislators on board for such a bill. Yet, Oregon was just coming through the hottest summer on record: climate change was clearly accelerating, and the science was clear that fossil fuels were driving this dangerous change. So the workgroup studied the concerns of legislators and the Treasurer: All of us shared the goal of protecting the Public Employee Retirement Fund (PERS) for Oregonians. However, as long as the Treasurer opposed a bill, we could not move enough legislators to action, even by showing data that fossil fuel divestment would improve the Treasury’s financial position. With these facts in mind, the workgroup decided on a 3-pronged approach for the COAL Act – the Clean Oregon Asset Legislation bill – HB 4083 with Representative Khanh Pham as the chief sponsor of the bill and Senator Jeff Golden as the co-chief sponsor in the Senate. First, crafting a bill that was right-sized for the short session. From Divest Oregon research based on public records requests for data from the Treasury, it was now public knowledge that the Treasury was investing at least $1billion in coal-based projects. Whenever Divest Oregon members discussed this with anyone, jaws dropped. “Coal? Really?” So thermal coal (coal used in power plants) – one of the worst emitters of CO2 and pollution – became the focus of the bill. The major arguments presented in the one-pager to legislators focused on the scale of the issue and the fiscal need for the bill. Additional Divest Oregon research suggested that over an 8 year period the Oregon PERS’ coal investments had underperformed, with the research corroborating data from California’s CalPERS about the savings they experienced from coal divestment. Second, engagement with the Treasurer and his staff. Although the Treasurer was creating a net zero plan, and acknowledging publicly that fossil fuels and climate change posed significant risks to financial returns, Divest Oregon had concerns that this plan would not meet the urgency of climate change. So Rep Khanh Pham, in consultation with Divest Oregon leaders, met regularly with the Treasurer and his chief of staff to hammer out language for the bill that was acceptable on all sides. The language of the bill became advisory, similar to the Sudan divestment bill of 2005, which had successfully resulted in the Treasury removing over $300 million in investments from Sudan. The definition of coal investments were aligned with the definition in the Treasurer’s net zero plan. Ultimately, the Treasurer agreed to testify in favor of the bill. Third, Divest Oregon advocated for the COAL Act with every legislator in a variety of ways. In January 2024, as the beginning of the short session approached, Divest Oregon organized 100 concerned constituents to go to Salem for a Lobby Day to solidify support and bring legislators on board. Wearing green and sporting Divest Oregon buttons on their lapels, many small groups of voters crisscrossed the capitol building as they went to 35 separate appointments with their representatives and senators. Some more-distant constituents participated via Zoom, through laptops hand-carried to these appointments. At the luncheon afterward, the Lobby Day participants shared three common themes in legislators’ reactions: “Coal? Really? Why are we still invested in that?” “We must protect PERS.” “Does the Treasurer support this bill?” They also reported that, once reassured on these points, many legislators indicated their support for the bill and signed up as co-sponsors. Thank you notes were signed on the spot, and postcards prepared to follow up once the session commenced, workgroups met, and voting began. Throughout the session, coalition members continued to call, email, and meet with their legislators to urge their support for the COAL Act. Two hundred letters of support for the bill were registered as part of the committee hearings (and a mere 8 in opposition.) Rep Khanh Pham, Senator Jeff Golden, and many concerned Oregonians testified passionately and knowledgeably in support of the bill in the legislature’s House and Senate committee public hearings. The Treasurer’s own testimony included his statements that the “The issue of climate change broadly is an urgent risk to the investment returns of the Oregon Public Employee Retirement Fund,” and that the COAL Act “is complementary” to his net zero plan. Only a day before the end of the short session, the COAL Act passed its final hurdle. Once the Governor signs, the COAL Act will become law, and Oregon will become the third state to pass a public pension divestment bill in the United States, after the Maine divestment bill of 2021 and the California coal divestment bill of 2015. Divest Oregon, with all coalition partners, plans to celebrate this historic win on April 2nd, at a reception following the Oregon Treasurer Candidate Forum .

Why is Treasurer Read’s Net Zero Plan significant? It acknowledges that climate change risk is a financial risk to the Oregon Public Employee Retirement System (PERS) that threatens the benefits for retired state employees and commits to mitigating that risk. It brings the Oregon Treasury in line with all other State agencies that were mandated by executive order in 2020 “to take actions to reduce and regulate greenhouse gas emissions” (Governor’s Executive order 20-04). It commits to measurably reducing the “greenhouse gas footprint” of the PERS retirement fund and begins by partially quantifying that footprint with industry standard methodology. It includes private investment funds in the emissions analysis, which most other such plans omit. It takes several immediate steps to begin to address PERS financial climate risk: It commits to no new investments in private funds that are “primarily” (undefined) fossil fuel focused. It directs Treasury staff to review publicly traded investments that derive >20% of revenues from thermal coal, oil sands and fracked shale oil and gas by February 2025. It calls for increased staffing at Treasury to be able to implement other longer-term strategies for mitigating climate risk. It sets specific targets for OPERF emissions reductions, although they are very long term (2035 and 2050). While a significant event, the Net Zero Plan also contains significant weaknesses and raises many questions: 1. Will the Net Zero Plan actions occur soon enough to protect OPERF beneficiaries from climate risk? 2. Is the Net Zero Plan’s measurement of investment emissions comprehensive enough to identify all of OPERF’s significant climate financial risk? 3. Will engagement with fund managers and companies to ensure OPERF investments have “climate-or-transition aligned” or “credible net zero transition plans” – the Net Zero Plan’s core strategy – be effective? 4. How will PERS beneficiaries and the public know this plan is working to protect pensions with the urgency called for by accelerating climate change? 5. How will the Net Zero Plan become a formal OIC policy? 6. Why is the Net Zero Plan limited to OPERF? Read the report to learn more.

Testimony by Dan Cohn, Energy Finance Analyst Institute for Energy Economics and Financial Analysis To the Oregon State Legislature, House Committee on Emergency Management, General Government, and Veterans on House Bill 4083 I submit this testimony in support of House Bill 4083. The coal industry is exposed to significant investment risks as its market position rapidly declines. House Bill 4083 would be protective of the value of Oregon’s pension investments. The present bill would direct the State Treasurer to avoid new investments into the thermal coal industry; review the pension fund’s current holdings for thermal coal companies; and dispose of thermal coal company securities in a prudent manner, with exceptions made for companies that are transitioning their business into renewable energy on a timeline acceptable to the Oregon Investment Council. Decreasing the state’s exposures to coal is judicious in light of the industry’s declining prospects. “Thermal” coal is coal mined for combustion in power plants to produce electricity. It comprises the lion’s share of U.S. coal production . The amount of coal burned each day in the U.S. has fallen from about 2.8 million tons a day in 2008 to roughly 1.1 million tons a day in 2023— a 62% drop . Coal’s share of electricity generation has fallen significantly and faces further declines. Final figures for 2023 are expected to show coal falling short of a 20% share of the U.S. power market. This stands in contrast to all years before 2020, when coal’s market share never dipped below 20%. This about-face is expected to persist in the near-term, as large coal stockpiles at power plants decrease the need for additional coal purchases. The U.S. Energy Information Administration predicts that total coal mined in 2024 could fall nearly 20% from last year, with further declines in 2025. The coal industry has negligible prospects for turning around its shrinkage. No new coal-fired power plants have been announced in the U.S. for many years. Coal fired power generation cannot compete on price with natural gas, wind, or solar. Proposals to use coal for non-combustive purposes have not seen significant commercial deployment . Instead, electric utilities have announced new construction of nearly 12 times more solar, wind, and battery storage capacity than the next largest source of new generation, gas-fired power plants. The future for the coal industry is reflected in its miniscule share of the stock market’s value. At the end of 2023, the coal industry weighed in at a mere 0.038% of the Russell 3000, a commonly recognized index representing U.S. stocks. (FTSE Russell. Russell 3000 Sector Weight Holdings Data. December 29, 2023.) The present bill directs the Oregon Investment Council and State Treasurer to reduce exposure to coal in a way that is protective of the portfolio’s long-term value: The bill respects the fiduciary duties of the Council and Treasurer by requiring any investment actions to be prudent and reasonable and by setting as a goal “no monetary loss” to the fund from these activities. The bill advises the fund to make use of existing knowledge and expertise. By expressly permitting consultations with peer pension funds that have already divested from the coal industry, the Treasurer and Council may reduce costs and increase confidence in the decisions made pursuant to this law. By encouraging the fund to utilize the materials produced by the German organization Urgewald, the bill sanctions the use of one of the most comprehensive lists of coal industry participants available. It is prepared with meticulous attention to detail and is provided free of charge. The bill requires annual reporting of the Treasurer’s actions in this area until coal holdings are eliminated. Regular and transparent reporting is an essential element to establish trust in public processes and commitments.