U.S. Senator Ted Cruz announced on Wednesday the introduction of the Stop TSP ESG Act, a bill proposing legislation to prevent asset managers for federal employee retirement funds from exercising voting rights, in order to ensure that they don’t use “taxpayer dollars to push Environmental, Social, and Governance (ESG) and Diversity, Equity, and Inclusion (DEI) policies.”
The U.S.’ Thrift Savings Plan (TSP) is a retirement savings and investment plan for federal government employees and uniformed services members.
The TSP funds recently passed $1 trillion in assets, which are managed primarily by BlackRock and State Street, which Cruz’s office accused of using “TSP holdings to exert proxy voting power to push ESG and DEI policies” in a statement announcing the introduction of the new bill.
The new bill forms the latest in a growing series of anti-ESG moves by Republican politicians in the U.S., with BlackRock and State Street often at the center of attention. The asset managers, alongside Vanguard, are currently being targeted in a multistate lawsuit accusing them of violating antitrust laws through their sustainable investment initiatives and involvement in climate coalitions.
Under pressure, each of the asset managers has been forced to pull back on their sustainability-focused activities, with State Street recently pulling its U.S. business out of the Net Zero Asset Managers (NZAM) initiative, following a similar move by BlackRock. The firms have also reduced their support for climate and ESG-related shareholder proposals.
While Cruz said that the bill aimed to stop the asset managers from supporting for ESG and DEI proposals, the text of the legislation would actually prohibit any voting by the asset mangers on behalf of the TSP fund.
Cruz said:
“Americans deserve assurance that their retirement savings are being invested in the most fiscally responsible ways. Instead investment fund managers are using the retirement savings of federal employees to push ESG and DEI agendas that conflict with their investors’ interests. The Stop TSP ESG Act would end that practice and restore accountability, and I urge my colleagues to pass it expeditiously.”
