Climate change executive order could impact federal employees' TSP accounts

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Climate change executive order could impact federal employees’ TSP accounts

By Eric White @FEDERALNEWSCAST
May 24, 2021 11:35 am

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• A new climate change executive order could have implications for federal employees and the Thrift Savings Plan. President Joe Biden’s order calls on the Labor Department to review fossil fuel investments and climate change financial risks in the Thrift Savings Plan. The largest federal employees union said it supports the review. Democrats in the House and Senate previously introduced legislation that calls for a similar review. The agency that administers the TSP has previously said divesting from fossil fuel companies could have a serious impact on the plan.

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1. Biden Climate Edict Could Spell End for TSP Fossil Fuel Investments

Pay & Benefits

Biden Climate Edict Could Spell End for TSP Fossil Fuel Investments

The president’s executive order aimed at incorporating “climate-related financial risk” into federal budgeting also instructs officials to review how the Thrift Savings Plan considers risks from climate change in its decision-making.

MAY 24, 2021 04:48 PM ET
THRIFT SAVINGS PLAN | CLIMATE CHANGE

Erich Wagner

President Biden’s recent executive order aimed at ensuring federal agencies consider the risks of climate change in their budgeting and making the American economy carbon-neutral by 2050 also has the potential to impact how federal employees save for retirement.

The edict instructs the secretary of Labor to identify actions “to protect” federal employee pensions from “the threats of climate-related financial risk.” And it requires an assessment within 180 days of how the Federal Retirement Thrift Investment Board, which administers the Thrift Savings Plan, “has taken environmental, social and government factors, including climate-related financial risk, into account.”

Democratic lawmakers in recent years have introduced legislation to require the Thrift Savings Plan to offer versions of their investment funds that divest from contributors to climate change like fossil fuel companies, but those bills never advanced through Congress. The most recent iteration, the RESPOND Act, introduced by Rep. Rashida Tlaib, D-Mich., and Sen. Jeff Merkley, D-Ore., would establish a Federal Advisory Panel on Climate Change within the Federal Retirement Thrift Investment Board, create an optional investment plan for those who don’t want to invest in fossil fuels, and plan to divest from “corporate polluters” altogether if certain profitability metrics are met.

Efforts to offer 401(k)-style retirement savings opportunities to federal workers without investing into fossil fuel companies got a boost following Biden signing the climate change executive order, when the American Federation of Government Employees, the largest federal employee union, endorsed both the executive order and the RESPOND Act. Previously, only AFGE’s local representing Environmental Protection Agency workers had endorsed the bill.

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