2 Follow-up testimony submissions regarding opposition submissions is below.
Alan R.P. Journet Ph.D.
Southern Oregon Climate Action Now
February 12th 2022
Chairs Graybar and members of the House Committee On Emergency Management, General Government, and Veterans:
I write as cofacilitator of Southern Oregon Climate Action Now, an organization of over 2000 Southern Oregonians and friends who are concerned about the climate crisis and wish to encourage statewide action to address it. For over ten years, we have been engaged with the statewide climate coalition and concerned legislators who share our interest in establishing state programs that will reduce greenhouse gas emissions and promote carbon sequestration in natural and working lands. I write today in connection with HB2601, The Treasury Investment and Climate Protection Act.
Climate concerned Oregonians throughout the state have been encouraged by agency responses to Governor Brown’s Executive Order 20-04 and the passage of bills in previous legislative sessions that move the state forward in doing our part to address this existential global crisis. We are, however, aware of one glaring loophole in the state’ effort. That loophole, it will not surprise you to read, is in the investment of Oregon Treasury funds. Over several election cycles, none more so than 2022, Oregonians have demonstrated endorsement of efforts by the legislature and state agencies to address the climate crisis. It is only reasonable, therefore, to conclude that a majority of Oregonians would prefer that their tax and retirement investments do not undermine the state’s overall effort to address the climate crisis. Those of us in rural Oregon consider ourselves to be on the frontline of the climate crisis with increasing drought and associated wildfire risk. We think that state funds should not be invested in entities that increase our risk. Rather, we feel strongly that these funds should be invested in entities that counter the root cause of these threats.
As a result of these concerns, we urge closing this glaring loophole in Treasury investments. The steps we urge are:
- An immediate moratorium on new public and private investments in carbon-intensive entities and withdrawal from such funds as indicated below;
- Withdrawal within six months of all publicly traded state funds from carbon-intensive investments using as a criterion the Carbon Underground 200 list;
- Withdrawal within two years of investments in major fossil fuel (coal, oil and natural gas) producers and developers using the Global Oil & Gas Exit List (GOGEL) and Global Coal Exit List (GCEL);
- Withdrawal by 2035 from all private investments that are carbon intensive;
- Develop a plan for investments of state funds that reflects climate resilient principles and promotes social justice;
- Develop a plan that allows public scrutiny of the investment behavior of the Treasury with respect to public funds.
To those who argue that divesting from fossil fuel may compromise fiduciary responsibility, I note that my wife and I have personally chosen to invest in a fossil fuel free portfolio as has Southern Oregon Climate Action Now. Those claiming that divesting will threaten financial return simply have not assessed the veracity of the claim; it is another unfortunate and obscure form of climate science denial!
On behalf of SOCAN, I further urge you to consider favorably the principles embodied in HB2601 and support the bill.
7113 Griffin Lane
Jacksonville OR 97530-9342
Alan R.P. Journet Ph.D.
Southern Oregon Climate Action Now
February 15th 2022
Chair Grayber and members of the House Committee on Emergency Management, General Government and Veterans:
I recently submitted testimony on behalf of Southern Oregon Climate Action Now (SOCAN) on the Treasury Investment and Climate Protection Act, HB2601. As an organization committed to promoting awareness and understanding about the science of global warming and its climate change consequences SOCAN finds the concept embodied in HB2601 highly laudable.
Today (February 15th), I visited the HB2601 bill page on OLIS and reviewed the submissions opposing the bill. As a rural Oregonian substantially concerned about how the climate crisis is unfolding and affecting those of us living on the frontline, I offer the following responses:
I start will with a few quotes from a recent study of our Treasury’s investment behavior by Becker et al. (2022):
“Rather than championing this necessary and massive shift in the energy sector, the Oregon State Treasury still has at least $5.3 billion invested in climate-wrecking fossil fuel companies with over $1 billion invested in the coal industry alone.”
“In general, funds with significant fossil fuel investments have provided lower returns over the past decade than funds without.”
“Fossil fuel divestment is an effective tactic for influencing future investment strategies. Divestment is a vote of “no confidence” in the fossil fuel sector that can decrease company valuation and raise the cost of financing future products (and therefore keep more fossil fuels in the ground).”
“Fossil fuel investments do not align with Oregon’s political commitments, and they do not reflect the growth trajectory of the state’s economy. Over half of all energy sector jobs in Oregon are in clean energy. Job growth in this area is outpacing economy-wide job growth by over 60%.”
“Oregon has a green economy, grounded in renewable energy, agriculture, and a historical commitment to protecting our natural spaces. Building on this legacy and leading the country forward requires bold leadership from every governmental agency including, critically, divestment by the Oregon State Treasury.”
I respond below to submissions by Hal Smith, Kelly Kintz, Heather Grey, and Treasurer Read:
Hal Smith seems not to have done his homework; if the treasurer were to be honoring his fiduciary responsibility, he would have divested from fossil fuels yesterday. This is because renewable energy is a much more promising energy source than fossil fuels and offers better financial returns.
Contrary to the claims of Kelly Kintz, who also seems not to have done the requisite homework, it is not the green industry that needs subsidy in order to survive but the fossil fuel and nuclear industries. Second, despite the campaign of disinformation waged by the industry, fossil (natural) gas is profoundly not a clean energy source; in fact, because of the leakage of methane, some 30 times worse than carbon dioxide as a warming gas on a 100-year basis, and some 80 times worse on a 20-year basis, this fossil fuel is probably as bad as coal if not worse. Kelly seems to have forgotten about storage (whether battery storage or gravity storage) as a way to overcome the intermittent generation of solar and wind energy. In addition, of course, our energy relies on a grid. This means that we do not rely on solar or wind from just one location but from a multiplicity of locations; the wind may not be blowing in one place, but probably is elsewhere.
Presumably Heather Gray simply rejects climate science and does not accept the data that show our Earth is warming and that fossil fuel combustion is the primary cause. Heather similarly seems not to understand that divesting absolutely does not challenge the income received from investing state funds.
State Treasurer testified: “Legislation that imposes blanket or even targeted restrictions on how or where Treasury can invest will affect these numbers and would mean that funding retirement incomes is no longer the sole purpose of OPERF. Claims that limiting Oregon’s investment choices through statute will automatically or easily be revenue-neutral or yield higher returns are pure fiction.” In addition, the Treasurer states: “these restrictions will almost certainly lead to a reduction in investment returns and the benefits OPERF payments afford communities across our state.” While there may be a revenue consequence of actualizing the bill, we should acknowledge that it will probably be positive since fossil fuel-free investment portfolios generally perform at least as well if not better than unrestricted funds. While it is certainly the case that individuals have the right to make their own investment choices, it is also the case that the state has a responsibility to avoid investing in targets that behave in a socially irresponsible manner. Would the Treasurer and the Oregon Investment Council (OIC) countenance, for example, investing in corporations that practice child labor or earn their profits by promoting authoritarian leaders around the planet? I certainly hope not! It should be the responsibility of the Treasurer and the OIC to follow the values of Oregonians as reflected in the recent campaign platforms of the elected Governor and the party controlling the chambers. The Democratic Governor, House, and Senate were elected on campaigns of addressing the climate crisis. This, therefore, clearly reflects the values of Oregonians. By the same token, the investment of state funds should be based on targets that reflect the values of Oregonians.
While most corporations incorporate on the basis of requirements that they maximize profit, there exist Benefit corporations that commit to promoting social justice and a sustainable planet in addition to profit. Surely, the state of Oregon, comprising people and a threatened environment should adopt policies akin to those of the Benefit (B) corporation, not just the unfortunate ‘maximize profits’ principle exhibited by most corporations.
The document by Becker et al. (2022) offers evidence that counters these comments.
Becker A, Bogrand A, Palmiter S, Room C, Scandella B, Schramm J & Yuill N 2022 Risky Business: Oregon Treasury’s Fossil Fuel Problem.
Alan R.P. Journet Ph.D.
Southern Oregon Climate Action Now
February 23rd 2023
Chair Graybar and members of the House Committee on Emergency Management, General Government and Veterans:
I write as cofacilitator of Southern Oregon Climate Action Now (SOCAN), an organization of over 2,000 rural Southern Oregonians who are concerned about the climate crisis and urge statewide action to address it. The mission of SOCAN is to promote awareness and understanding of the science of global warming and its climate chaos consequences and stimulate individual and collective action to address it.
I write to respond to the draft letter submitted by Representative Helm that contains unsubstantiated assertions, hidden assumptions, and unreasonable interpretations of HB 2601 with comments shared by past deputy comptroller of New York State, Tom Sanzillo.
The Helm letter inaccurately states that divestment from fossil fuel stocks will lose money. But it doesn’t explain why.
- Over the last twelve years the Morgan Stanley All Country Index without fossil fuels outperformed its index that includes fossil fuels. and
- Over the last ten years the Energy Sector lagged the S&P 500.
The letter says the bill will eliminate the private equity portfolio dragging down returns as a whole. But…
- This isn’t true. There are plenty of investments beyond fossil fuels that can produce profits. McKinsey reported that of the eight covered sectors in private equity, oil and gas have the lowest deal volumes for the last five years.
The letter says divestment will result in forced sale losses for Private Equity. But…
- This claim is unreasonable; the bill does not require forced sales; it gives until 2035 to unwind the existing private equity portfolio.
The letter says revenue losses will hurt the credit rating of the state. But…
- Moodys has stated that investments in coal plants along with oil and gas infrastructure are high credit risks while S&P has said the same about petrochemical hubs.
- Revenue losses are unlikely if there is an orderly divestment of fossil fuels. Long term performance of low carbon funds is projected to be positive.
These unfounded claims must be substantiated with data. The Treasury owes you and PERS members an honest and robust analysis of HB 2601 because they are acting as fiduciaries. Financial regulators around the world are sounding the alarm that climate change poses significant systemic risks that investors can proactively mitigate. We are depending on you. Thank you.