Pension Fund Commits to Net-Zero by 2040 Investment Policy
$45 Billion Public Pension Fund Announces Comprehensive Climate Action Plan with Interim Targets and $15 Billion Climate Solutions Investment Goal
PORTLAND, Ore., November 22, 2025 — The Pacific Northwest Public Employees Retirement System (PNW PERS) today announced its commitment to achieve net-zero greenhouse gas emissions across its $45 billion investment portfolio by 2040, positioning the fund among the most ambitious U.S. public pension systems addressing climate-related financial risk.
The decision, approved unanimously by the PNW PERS Board of Trustees, establishes a decadal roadmap with measurable interim targets, enhanced governance structures, and a dedicated $15 billion allocation to climate solutions investments by 2035. The plan aligns with the fund’s fiduciary duty to protect long-term returns for approximately 285,000 public employees and retirees across Oregon and Washington.
The commitment reflects growing recognition within the pension industry that climate change presents systemic financial risk. According to analysis from MSCI cited in a recent Office of International Monetary and Financial Institutions report, the world’s listed companies could face total losses of approximately $1.3 trillion from physical climate hazards alone over the next year, underscoring the materiality of climate risk to portfolio performance. Read more: Green Central Banking coverage of OMFIF climate risk report
“The data is unequivocal—climate risk is investment risk,” said PNW PERS Chief Executive Officer Margaret Chen. “Our 2040 net-zero commitment is not an environmental statement; it is a financial imperative that ensures we meet our obligations to beneficiaries while positioning the portfolio for the global economic transition already underway.”
PNW PERS will implement a four-pillar strategy modeled on frameworks from the UN High-Level Expert Group and the Institutional Investors Group on Climate Change. First, the fund will disclose emissions across Scopes 1, 2, and 3 with interim reduction targets of 30% by 2027 and 60% by 2032. Second, PNW PERS will intensify engagement with portfolio companies and asset managers, requiring absolute emissions reduction targets and alignment with the Science Based Targets initiative. Third, the fund will ramp up climate solutions investments in renewable energy, energy efficiency, sustainable transportation, and climate adaptation infrastructure, building on its current $3.2 billion allocation.
The fourth pillar addresses divestment risk, mandating exclusion of upstream fossil fuel investments from all new private market commitments and establishing criteria for managed phase-out of existing high-carbon assets that fail to demonstrate credible transition pathways. This builds on the fund’s 2021 divestment from thermal coal producers.
Recent industry data validates the accelerating trend toward net-zero commitments. A December 2024 survey by the Pensions and Lifetime Savings Association found 65% of pension funds now maintain net-zero commitments, with 23% targeting 2040 specifically. However, the same research identified data quality gaps and policy uncertainty as primary implementation challenges—obstacles PNW PERS aims to address through enhanced internal analytics and proactive policy advocacy.
PNW PERS has already begun building climate competency across its investment team, adding three dedicated sustainable investment specialists and integrating climate scenario analysis into all asset class reviews. The fund will publish its inaugural TCFD-aligned climate report in March 2026, establishing a baseline for its decarbonization pathway and enabling annual progress tracking.
“The transition to a low-carbon economy is inevitable. Our role as fiduciaries is to navigate it skillfully, not to ignore it,” Chen added. “This plan provides our beneficiaries with transparency, our investment partners with clear expectations, and our region with leadership on one of the defining economic challenges of our era.”
About PNW PERS
The Pacific Northwest Public Employees Retirement System provides defined benefit pension administration and investment management for public employees throughout Oregon and Washington. With $45 billion in assets under management as of October 2025, PNW PERS serves approximately 285,000 active members and retirees. The fund has maintained an annualized net return of 8.4% over the past decade and is governed by a 12-member Board of Trustees representing employers, employees, and retirees. PNW PERS is a signatory to the UN Principles for Responsible Investment and a member of the Climate Action 100+ investor coalition.
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