Rep. Chip Roy (R-Texas) on May 23 introduced a bill designed to bar the federal government from investing in retirement funds that use Environmental, Social, and Governance (ESG) criteria.
Specifically, Roy’s bill would prohibit the Thrift Savings Plan (TSP), a federal retirement plan, from offering retirement packages that rely on ESG criteria.
ESG describes a largely financial movement whereby corporations and financiers agree to use their wealth and influence to achieve a left-wing set of policy objectives. These include reducing the use of fossil fuels, restricting gun rights, and other controversial left-wing positions. Some of its largest proponents include BlackRock, Vanguard, and State Street, some of the wealthiest firms in the world.
The bill has 17 cosponsors, including Reps. Dan Bishop (R-N.C.), Troy Nehls (R-Texas), Byron Donalds (R-Fla.) Dan Crenshaw (R-Texas), Scott Perry (R-Pa.), Bob Good (R-Va.), Andy Biggs (R-Ariz.), Lauren Boebert (R-Colo.), and others.
Roy said that the proliferation of ESG struck against free market norms and posed dangers for Americans.
“Environmental, Social, and Governance (ESG) investing poses a dangerous threat to the free flow of capital,” Roy said. “This movement is actively threatening our domestic energy supply, empowering activist shareholders, and advancing woke gender and racial ideologies.
“The federal government should not enable ESG,” Roy said.
But last year, he noted, the TSP began offering federal employees around 5,000 mutual funds, including some that use ESG criteria.
Roy said that if the TSP were allowed to continue ESG investment, it could strengthen the movement.
“ESG is an investing scheme woke corporations are using to appease the Left by destroying reliable American energy and advancing radical gender and racial ideologies,” Roy told the Epoch Times in a statement about the bill.
“Last year, the Thrift Savings Plan began allowing federal employees to invest their taxpayer funded salaries into ESG plans,” he added. “The U.S. Government has no business propping up woke scams like ESG. Congress should eradicate every federal policy and office that promotes it, starting here.”
The TSP currently manages around $817 billion in assets.
Because the “vast majority of TSP contributions stem from withholdings from federal or servicemember paychecks and their respective agency matches,” Roy said, “TSP is effectively allowing billions of taxpayer dollars to be used for ESG investing.”
To counter the growth of this practice, Roy’s bill would place restrictions on the criteria the TSP can use for investment.
It would prohibit investment first on the basis of environmental criteria, including the emissions produced by a vehicle, climate change issues more broadly, pollution, or a company’s endeavors in fossil fuel production. It would also bar investments on the basis of social criteria, including whether a company manufactures firearms, or the racial, sexual, or gender makeup of its board of executives.
Likewise, it would restrict investment on the basis of a company’s political beliefs or donations.
Finally, it would bar investments that have “more rigorous ... corporate governance standards” than are found “in applicable State and Federal Law.”
The bill would retroactively require the TSP to remove funds in violation of these provisions. It allows for civil suits to be brought against the TSP for violation of these rules.
The Texas Public Policy Foundation (TPPF), a Texas-based conservative nonprofit, praised the bill in comments to The Epoch Times.
Republicans’ Earlier ESG Bill Vetoed
The measure is similar to a more expansive one passed by the Republican House earlier this year.That bill, which would have instituted anti-ESG rules for private investing, was vetoed by President Joe Biden, the first veto of his presidency.
The bill would have overturned a Department of Labor rule allowing investment firms to consider ESG criteria in investments. Until that rule, investment firms had stricter obligations to their shareholders, with laws requiring that they make financially sound long-term investments for clients.
Proponents of the rule said that it would allow investors to be more socially conscious in their retirement planning; critics, meanwhile, said the rule would mean losses for investors and was a cover for a “far-left political agenda.”
“It is clear that President Biden wants Wall Street to use your hard-earned money not to grow your savings, but to fund a far-left political agenda,” said Speaker of the House Kevin McCarthy (R-Calif.), who supported the bill, after the veto. “That will hurt seniors and workers.”
It passed through the Democrat-held Senate with the support of Sens. Jon Tester (D-Mont.) and Joe Manchin (D-W.Va.), two red state Democrats facing reelection next year.
It will be up to McCarthy and Senate Majority Leader Chuck Schumer (D-N.Y.) to determine whether or not Roy’s bill comes to a vote in Congress.
If the bill comes to the Senate, it seems it could again win the support of moderates like Manchin and Tester.
After Biden vetoed the original ESG bill, Manchin blasted the move in a statement.
“Despite a clear and bipartisan rejection of the rule from Congress, President Biden is choosing to put his administration’s progressive agenda above the well-being of the American people,” Manchin wrote.
However, Schumer has echoed Biden’s opposition to such measures, saying that they put Americans’ retirement savings at risk.
An effort in the lower chamber to overturn the veto, a move requiring two-thirds support, later failed. Biden has not indicated that he’s changed his position on ESG issues, meaning that he’s likely to veto the legislation if it comes to his desk.
