A new analysis from corporate social responsibility non-profit As You Sow finds billions of retirement savings in the Federal Thrift Savings Plan (TSP) are invested in fossil fuels.
The Federal TSP is a government-sponsored retirement savings plan for federal employees and uniformed service members, designed to offer similar benefits available to those in the private market.
According to As You Sow, of the $725 billion in retirement savings invested into the TSP for six million participants, over $35 billion are allocated to coal, oil, and gas companies, with $9.7 billion invested directly in 10 oil and gas entities including Exxon Mobil, Chevron, and ConocoPhillips.
The analysis also rated the fossil fuel exposure level of TSP’s equity and target date options, grading all but one with a “D” or “F” score.
As You Sow, a long-time advocate for climate change, urges the federal plan to recognize climate-related risks that can danger participants’ retirement savings.
“If the TSP continues to ignore climate risk, plan participants could face financial losses from stranded assets and other climate-related financial risks,” said As You Sow CEO Andrew Behar, in a statement. “The federal government should be protecting its employees’ nest-egg savings from the economic consequences of climate change, not sweeping this risk under the rug.”
The study reignites an argument on whether retirement plans should invest in, or even report their contributions to fossil fuel funds, especially as more attention is shifted to climate-focused investments.
The politicization of socially responsible investments, including environmental, social, and governance (ESG) funds from both Democrat and Republican lawmakers have also contributed to regulatory uncertainty, and the question of whether climate-focused funds are indeed profitable.
Ultimately, As You Sow calls on the TSP to evaluate and manage climate risk in the best interest of plan participants, or to work with asset managers who do, as bound by their fiduciary duty.
“A significant proportion of TSP fund assets are managed by BlackRock and State Street, who routinely vote the fund’s shares,” said Behar. “The Federal Retirement Thrift Investment Board’s fiduciary duty compels it to ensure that its chosen asset managers are voting in a way that minimizes climate-related financial risk.”
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