Thrift Savings Plan forces climate investment risk onto federal employees, jeopardizing their financial futures

FOR IMMEDIATE RELEASE

MEDIA CONTACT: Sophia Wilson, swilson@asyousow.org, (341) 600-1832

BERKELEY, CALIFORNIA—OCT. 19, 2023—A new analysis from As You Sow of the Federal Thrift Savings Plan (TSP), which manages $725 billion in retirement savings for six million participants, found over $35 billion invested in coal, oil, and gas companies. Just ten oil and gas majors, including Exxon Mobil, Chevron, and ConocoPhillips, account for $9.7 billion invested.

The analysis, which focuses on the equity and target date options provided in the TSP, rated all but one as earning a “D” or “F” grade for their exposure to fossil fuel companies, with some exposures as high as 10%.  

“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. “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.”

Institutional investors across the world have recognized the need to reduce investments in the companies most responsible for climate change. Some 1,500 institutions representing more than $40 trillion in assets have committed to reducing exposure to investments in high-carbon industries. This includes retirement savings systems: The University of California (UC) removed all companies that own fossil fuel reserves from the UC Retirement Savings on the basis that “the fossil fuel industry faces considerable long-term financial risk,” and that removing such companies “will have a positive financial and risk-reducing impact on fund performance in the long run.”

In a recent Executive Order, the President requested information on how the Federal Retirement Thrift Investment Board is taking climate risk into account. The Board’s response did not indicate a strong understanding of the risk that climate change poses to the plan’s fund options, or the plan administrator’s fiduciary responsibility to evaluate and manage that risk in the best interest of plan participants.

While the TSP faces legal barriers to fully addressing climate risk in the offered fund options, there are steps to safeguard workers' savings. “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.”

 As You Sow publishes monthly report cards rating retirement plans and mutual funds as part of its Invest Your Values initiative.

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As You Sow is the nation’s leading shareholder representative, with a 30-year track record promoting environmental and social corporate responsibility and advancing values-aligned investing. Its issue areas include climate change, ocean plastics, pesticides, racial justice, workplace diversity, and executive compensation. Click here for As You Sow’s shareholder resolution tracker.