Congressman Jim Langevin (D-RI) and Senator Sheldon Whitehouse (D-RI) have introduced legislation that would allow federal employees to make socially responsible investments (SRI) in their retirement plans.
Known as the Federal Employees Responsible Investment Act, the legislation would direct the Federal Retirement Thrift Investment Board to select a “Corporate Responsibility Index” as an option for Thrift Savings Plan (TSP) contributions by federal employees – allowing them to direct their retirement investments toward socially responsible corporations, and away from ones with poor environmental and human rights practices.
Langevin has been a strong advocate for socially responsible investment, championing legislation in the House over the past five sessions of Congress.
“I strongly believe that federal workers should be able to invest in companies that demonstrate a commitment to sound environmental, social and governance practices,” said Langevin. “This legislation would allow federal employees to feel good about their investments, and would encourage companies to implement socially responsible and environmentally sustainable policies and practices. Investors are increasingly turning to socially responsible investment options because good corporate practices are often an indicator of good management, financial success and long-term stability.”
The notion of having investment options such as this within the TSP is not new. We have reported in the past on discussions from within Congress to push for “socially responsible” funds. See for example Socially Responsible Investing Through the TSP and Your Retirement Security and The TSP Pot is Growing Fast: Will Congress Resist the Political Opportunities?.
A survey we ran around that time indicated that many of our users didn’t like the idea of Congress dictating the types of investments within the TSP.
Langevin’s bill, however, would do just that. It would set up a Corporate Responsibility Index that would include “a broad index of stocks of companies that maintain strong corporate governance, sustainable environmental policies and practices, solid workplace relations, positive community involvement, safe products and respect for human rights around the world.”
As Senator Whitehouse put it, “This legislation will allow millions of federal government employees and retirees to use the power of their individual purse to tell big polluters they can’t keep poisoning our air and water without consequences.”