Oregon is poised to become the latest US state to incorporate climate risks into its retirement systems’ investment policies. The state’s treasurer, Tobias Read, presented a raft of climate measures, including a target allocation for transition-related investments and portfolio-wide decarbonisation plans, to the investment council for the $93.8 billion Oregon Public Employees Retirement System last week.

“This plan represents a really significant milestone… [to manage] the systemic risk that the climate change presents to our investments,” said Read. “It puts [the pension] on offense and allows us to continue meeting our fiduciary obligation to the people we serve.”

OPERS has previously set a portfolio-wide net-zero-by-2050 target. Now, Read has proposed “an aggressive interim target of a 60 percent reduction in the carbon intensity by 2035” across the retirement system’s portfolio, relative to a 2022 baseline. “This is in my view what we have to do to protect the pension fund and the beneficiaries,” Read said.

Read’s plan includes increasing OPERS’ “climate positive” and “climate solutions” investments in real assets and private equity to $6 billion by 2035. OPERS currently has $2 billion in such investments in these asset classes, said Read. OPERS’ private equity team, for example, should “develop and monitor a pipeline of managers that are fundraising for climate and climate-positive related funds”.

Beyond its climate allocation, Read has proposed a tilt towards sustainability across OPERS’ entire private markets portfolio. “We’re seeking to invest more in companies that have their own plans to get to net zero to acknowledge the reality of climate change and its impact on their operations,” he said. This includes increasing exposure to “managers that have their own net-zero plans” in private equity and real estate and incorporating transition plans into OPERS’ selection criteria for managers. By 2035, 90 percent of OPERS’ real estate emissions sources and 65 percent of its real assets and private equity emissions sources should be covered by credible net-zero transition plans, per Read’s proposal. “We’re going to invest less in companies and strategies that are exposed to climate risk… and use our leverage as investors to push for credible transition plans.”


Read proposed that OPERS “exclude new investments in private market funds that have an exclusive focus on fossil fuels” and opportunities “that are particularly carbon intensive”. Where a private equity or real assets fund derives more than 20 percent of its revenue from fossil fuels, OPERS would require “credible transition plans” before it inks a new commitment.

OPERS has a number of LP stakes in traditional energy private funds, PEI Group data shows. As recently as March 2023, it committed $200 million to NGP Energy Capital Management’s thirteenth Natural Resources fund and $125 million to Appian Capital Advisory’s third Natural Resources fund, both of which focus on fossil fuels. In February 2023, OPERS committed $150 million to EnCap Flatrock Midstream’s flagship fifth fund and made a further $50 million available for co-investments alongside this fund. In July 2023, it committed $160 million to Quantum Energy Partners’ second capital solutions fund, which invests across traditional and renewable energy assets.

OPERS also has extensive exposure to renewable energy assets through generalist and multi-sector infrastructure funds such as Brookfield Infrastructure Fund V (OPERS has committed $400 million), Global Infrastructure Partners V ($251 committed) and EQT Infrastructure VI ($300 million committed).

Catching up with California

Oregon is one of a handful of US states to grow climate solutions exposure and develop decarbonisation plans for their retirement systems’ investment policies. NPM readers will be familiar with these examples:

The California Public Employees’ Retirement System plans to increase its allocation to climate solutions investments from $47 billion to $100 billion by 2030, introduce climate scenario analyses and push managers to develop net-zero and transition plans.

The California State Teachers’ Retirement System has a $10 billion Sustainable Investment and Stewardship Strategies programme and has created a climate-impact classification framework for its private markets portfolio to monitor its decarbonisation progress.

The Los Angeles County Employees Retirement Association has started to conduct climate scenario analyses on its portfolio.

The New York City Employees’ Retirement System and the Teachers Retirement System have introduced exclusions policies for upstream fossil fuel investments, initially asking private fund managers to exclude such assets and then excluding these managers if these engagement attempts prove futile.