To respond to a news release by the Treasury that their most recent quarterly returns have been excellent, Divest Oregon publishes this set of charts that focus on the following statements and question: Private equity hasn’t delivered superior performance over the long term to OPERF Treasury staff disregarded OIC private equity policy and invested too heavily for many years OPERF allocations to all forms of high-risk opaque private investments are out of step with peers Can an unreformed Treasury culture be relied on to implement Net Zero policy? A statutorily required OIC complete investment program audit is five years overdue Divest Oregon looks forward to a public statement from the Treasury that addresses these issues and questions.

At the September 3rd Oregon Investment Council (OIC) meeting, Divest Oregon members made strong statements about the need to curb private investments. Risky, illiquid, high-fees and low-returns investments obscure a lot of the emissions that PERS is funding - and are difficult to divest in times when the need to be nimble is more critical than ever. You can read some of the testimony about not following allocation policy financial and climate risk promises by the Treasurer stewardship concerns AFT-Oregon’s Harper Haverkamp spoke of concerns of 17,000 members that are reflected in the recent AFT/AAUP National report . This report calls out pension funds’ private investments as antithetical to AFT’s values. Nichole Heil, from Private Equity Stakeholder Project , traveled from California to speak about the climate devastation and financial risk of two private investments made by the Oregon Treasury. More media coverage is showing up around the state about private investments at the Oregon Treasury. See the September 2 article from Willamette Week and the Oregon Journalism Project entitled, “More Questions Arise About State Investments in Private Equity.”

Treasury’s Love Affair with Private Investments Doesn’t Add Up  Two recent, major investigations by The Oregonian and the Oregon Journalism Project in Willamette Week and statewide local newspapers, recently detailed significant problems with the Oregon State Treasury’s private equity overexposure for PERS. Following these publications, Divest Oregon has received questions about the information and risks of this exposure, which our coalition has tracked with concern for years. In this memo, we provide answers. By standard financial yardsticks, Treasury’s private equity investments in the past 13 years routinely underperformed the benchmark long established by the Oregon Investment Council (OIC). They regularly underperformed the broad US stock market. They have not provided exceptional returns. Simply put, Treasury’s love affair with private equity no longer adds up. OPERF’s 10-year rolling average private equity returns are substantially below OIC’s benchmark OIC Investment Policy 1203 (at p.11) says that OPERF's private equity allocation is managed to produce net excess returns “over very long time horizons, typically rolling, consecutive 10-year periods” (emphasis added). Below are the 1, 3, 5 and 10-year third-quarter private equity rolling returns Treasury presented to the OIC at its 1-22-2025 meeting , at p.59. All OPERF 1, 3, 5 and 10-year rolling returns are below OIC’s benchmark (Russell 3000 stock index + 3%) by substantial amounts, though Treasury's website at p.9 says 1-year stated returns are not meaningful.

Open Letter to Treasurer Steiner and members of the OIC: Recent reporting in The Oregonian , Willamette Week and OPB’s Think Out Loud have highlighted concerns about OPERF’s investments in private equity, including acknowledgement by Treasury that OPERF’s 20-year average return for that asset class is 33% below its market outperformance benchmark. According to those reports, this has resulted in significant investment losses that would not have occurred had OST balanced its portfolio following allocation targets set by the OIC. These losses have subsequently increased the tax burden of public employers, such as schools —schools that have now had to lay off teachers. This has meant that the $500 million increased school funding approved by the legislature in 2025 must be used to pay for increased PERS contributions, rather than being used to improve student outcomes as illustrated below. On the heels of these reports in the local media, the American Federation of Teachers (AFT), the American Association of University Professors, and Americans for Financial Reform released a report, From Public Pensions to Private Fortunes: How Working People’s Retirements Line Billionaire Pockets (July 30, 2025). The report summarizes in a solid, documented, and readable manner the many studies showing how private equity and related forms of private investment no longer deliver superior returns, particularly on a risk-adjusted basis, along with concerns about workforce management practices. The response from OST has been less than informative, with simple references to the need to invest “on a 40 year horizon,” which does not answer the critiques from investment experts quoted in the articles or noted in the above articles and report. It is time for OST leaders to explain to beneficiaries and the public in detail the rationale behind their unusual strategy, including: ● Given the uncertainties of our current economic situation, why do they think private investments will outperform others? ● What data are they using to support this view? ● What guidance are they being given, by whom, to follow this path? ● Given their reference to positive private investment performance in the past, aren't they simply “driving with the rear-view mirror?” It would appear from recent news reports that OST is taking undue risks with beneficiaries' pensions. It is time for OST to answer the criticisms raised. For your reference, we have attached a more detailed letter regarding the major issues raised and a list of questions posed by these news articles and reports. We look forward to your response. Sincerely, AAUP-Oregon AFT-Oregon Senator Jeff Golden Senator Khanh Pham Senator James Manning Representative Farrah Chaichi Representative Lisa Fragala Representative Mark Gamba Divest Oregon Coalition Attached below: Illustration of losses to Oregon school from the Willamette Week article.

“How the Managers of Oregon’s $100 Billion Pension Fund Ignored Expert Guidance and Lost Big” James Neff, Willamette Week August 5, 2025 ( link to article ) “Oregon’s pension fund bet big on private equity. That could be a problem” Ted Sickinger, The Oregonian , July 21, 2025 ( link to PDF ) Two recent articles published in The Oregonian and Willamette Week investigate the issue of the Oregon Treasury’s reliance on private investments in Oregon Public Employee Retirement Fund (OPERF). The Treasury’s over-dependence on these funds (often called “private equity”) led Divest Oregon to put forth the Pause Act in the Oregon legislature’s 2025 session. Although the Pause Act was not enacted into law, it raised questions around the Treasury’s overuse of private investments, that they: are heavily invested in the fossil fuel sector are secretive - with minimal oversight, charge high fees are more likely to oppose unionization efforts and are ten times more likely to go bankrupt than their peers not controlled by private equity, and, as the two recent articles demonstrate, they are not delivering for Oregonians. As Ted Sickinger explains in The Oregonian : "For decades, Oregon’s public pension system has been kept afloat by a gusher of income from its investments in private equity, opaque private partnerships that typically buy companies, manage them, then try to sell them at some point for big profits.The returns have played a meaningful role in maintaining the system’s financial health, routinely outpacing other investments and keeping a funding deficit caused by misguided benefit decisions decades ago from becoming even larger than the nearly $30 billion shortfall today. Yet in the past several years, even as the stock market has been booming, that private equity gusher has slowed to a relative trickle. That’s undermining the system’s total investment returns, causing cash flow issues and, as of July, contributing to another rise in the punishing contribution rates that government employers are required to make to the fund." James Neff, in Willamette Week , estimates that OPERF “lost out on” $1.4 billion in 2024 in its rate of return by relying on private investment.

Oregon Treasury's "Net Zero" Bill, HB 2081 , passed both chambers of the Oregon Legislature on June 16, 2025. This legislation directs the Oregon State Treasury (OST) and the Oregon Investment Council (OIC) to manage and report on climate-related financial risks to the Oregon Public Employees Retirement System (OPERS). Introduced by State Treasurer Elizabeth Steiner, the bill intends to align PERS' investment strategies with the state’s climate goals while upholding fiduciary duties. HB 2801 is a step in the right direction for low-emission investments in the Oregon State Treasury, but it is only a first step toward addressing climate risk. Significant limitations must be addressed through Treasury policy or future legislation. Specifically:

“The statewide coalition Divest Oregon has been calling out the Treasury’s dirty investments for several years now, and they have also put out policy proposals, research, and legisl ation to shift our investments to help foster a clean energy economy.” — M Gaskill, Oregon Coast Radio Specifically, the conversation covers: The Pause Act (SB 681) which focused on new private fund investments in fossil fuel infrastructure like pipelines and LNG export terminals The Treasurer’s legislation ( HB 2081A ) on some movement toward net zero, a just transition, and reporting to the legislature and public The Climate Risk Report on the need for a paradigm shift in the Treasury’s thinking as to the financial impact of the climate, especially on public employees now in their 20’s, and the need to act together with other pension funds to direct the 11 trillion they manage toward mitigating future climate impact The addition of a fossil fuel free fund as an investment choice under the 529 College Education Plan - sign the Green529.org petition Divest Oregon’s inside/outside strategy This half-hour conversation is a terrific snapshot of Divest Oregon’s work. Find it on almost any podcast app - here are a couple: Spotify Apple Podcasts

Pension fund managers are confronting a tumultuous financial landscape. What is creating uncertainty? Inflation, tariffs, artificial intelligence, the energy transition, an oversupply of liquid natural gas, the rise of private equity and private credit… and the unique risk of climate change, which is the mother of all risks. Why is climate change an overriding risk to financial portfolios? Divest Oregon’s Rick Pope explains why in the Divest Oregon 2025 Climate Risk Review: No Place to Hide , a deep dive into current climate, economic and investment research. It stresses a core theme: The portfolio of retirement funds cannot be diversified to offset the risk of unabated climate change. There is nowhere for fund managers to hide from the fact that the entire portfolio of investments will be affected by climate catastrophe. Why is this important? Public pension funds in the US control nearly $11 trillion in assets of nearly 36 million state and local beneficiaries who depend on their funds to support their retirement. How fund managers invest the funds in their care can influence the market and influence public policy. Praise for the report from Treasurers, academics, and climate activists provides insight into the report’s impact. As the report documents, acting now to offset climate change will cost far less and harm asset values far less than accelerating climate change. Acting together, fiduciaries can move the market by investing in climate solutions, rather than financing climate destruction. How does the Climate Risk Report fit into the rest of Divest Oregon’s current work to pressure the Treasury to stop investing in fossil fuels? Divest Oregon submitted testimony in support of the current Treasurer's bill to reduce emission-creating investments in the portfolio. Oregon’s Treasurer is the first in the country to put forward a legislative mandate to consider climate risk and just transition in its investment decisions as it moves toward a low-carbon economy ( HB 2081 ). The Treasurer’s proposed legislation ( HB 2081 ) requires a just transition to clean investments. Divest Oregon and allies are working to articulate steps to implementation of this provision by the Treasury. The legislation has a reporting requirement. Transparency is an issue since approximately half of the PERS retirement fund has been invested in private investments, generally called private equity, which are currently secret. Reporting is a key tool in measuring progress toward reducing climate risk to the portfolio – and to all of us. A major part of our ongoing work is to pressure the Treasury to create a comprehensive and rigorous plan to stop the portfolio from contributing to climate degradation. Divest Oregon has a new campaign to encourage the Treasury to add a fossil fuel free option to the Oregon 529 Funds . The release of the 2025 Climate Risk Review clearly and unequivocally puts the Oregon Investment Council and the Treasury on notice that they must act to protect PERS assets from the risk of depressed values from climate change. As fiduciaries who must protect the financial well-being of their beneficiaries, their mandate is to assess risk – and climate change is an overriding risk – and factor it into their investment and resource allocation decisions. Confronting the impact of climate is the essence of their job.

Divest Oregon introduced The Pause Act ( SB 681 ), with Chief Sponsor Oregon Senator Jeff Golden’s support, to enact a five-year moratorium on new or renewed Treasury investment in private fossil-fuel funds. Why The Pause Act? For the past 50 years, the finance sector has dangerously re-written the rules of the global economy, including here in Oregon. Wealth has been extracted from our communities while our greenhouse emissions skyrocket. At the leading edge of this transformation has been the aggressive expansion of the private investment sector, generally referred to as private equity, which has over a trillion dollars in fossil fuel investments. The Oregon PERS portfolio is heavily weighted to private investments, which make up approximately half of the fund. The Pause Act is based on a key provision in past Treasurer Read’s net zero plan – which recognizes that portfolio emissions cannot be meaningfully reduced without ending new investment in long-term private funds holding fossil fuels. In the year since Treasurer Read announced his plan, to the public’s knowledge there has been no constraint on new private fund investments in fossil fuels. The Pause Act introduces transparency by requiring reporting to the public on progress under the bill. Current Treasurer Steiner has made a commitment to emission reduction of the portfolio. The Pause Act highlights the need for urgency, reflecting the impact of the climate crisis on all Oregonians and on the PERS portfolio. What The Pause Act accomplished Divest Oregon is engaged in ongoing discussions with the Treasury on a number of topics, including its stated goal of portfolio emission reduction and addressing climate risk to the portfolio. Divest Oregon’s years of pressure were a factor in Treasurer Read creating a Net Zero Plan and in the past and current Treasurers seeking to mandate the creation of an emissions-reduction plan through legislation. The Pause Act built on and continued that advocacy. SB 681, the Pause Act, created pressure on the Treasury, from the legislature and Divest Oregon members, to get specific as to how it will reduce emissions and confront the risk of climate to the portfolio. The Pause Act messaging made it clear: The Treasury must take an essential step to stop digging the hole deeper and address the elephant in the portfolio: long term private investment in fossil fuels. The bill died in committee despite an outpouring of public support. Its support was captured in the article from Oregon Capitol Chronicle (March 20, 2025). Why did the Treasury oppose the Pause Act? Treasurer Steiner made it clear that she would not support the Pause Act and would focus only on the Treasury’s bill, HB 2081. That bill set a goal of limited emission reduction and reporting, with no mention of private investments. (HB2081 was enacted as the “Treasury’s “Climate Resilience Investment Act”). The Treasury’s opposition to the Pause Act was problematic. It argued SB 681 would limit diversification, but SB 681 did not stop the Treasury from having a diversified strategy. There was nothing in the bill that said the Treasury should stop investing in private equity, real estate, or real assets – which are the major components of their private investments. The Pause Act required only that the Treasury would not invest in private investments that would be funding fossil fuel infrastructure, in accordance with the goals of the Net Zero Plan, as well as the goal of obtaining strong returns on investment: Private investments have not always provided strong returns. Treasury’s testimony on returns compared private equity with public equity returns. That comparison was a selective misdirection. The Real Assets asset class, which are private investments, actually has lower 5 & 10-year returns than Public Equity, and yet those returns were not reported in their testimony. Moreover, the Real Assets class produces twice the emissions intensity of the Private Equity class. (For more details, see the Divest Oregon full response to the Treasury testimony.)