RESPOND Act of 2021

II 117TH CONGRESS 1ST SESSION S. 606 To require the Board of Governors of the Federal Reserve System and the Securities and Exchange Commission to issue an annual report to Congress projecting and accounting for the economic costs directly and indirectly caused by the impacts of climate change, to require the Federal Retirement Thrift Investment Board to establish a Federal Advi- sory Panel on the Economics of Climate Change, and for other purposes. IN THE SENATE OF THE UNITED STATES MARCH 4, 2021 Mr. MERKLEY introduced the following bill; which was read twice and referred to the Committee on Homeland Security and Governmental Affairs A BILL To require the Board of Governors of the Federal Reserve System and the Securities and Exchange Commission to issue an annual report to Congress projecting and accounting for the economic costs directly and indirectly caused by the impacts of climate change, to require the Federal Retirement Thrift Investment Board to es- tablish a Federal Advisory Panel on the Economics of Climate Change, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 18:41 Apr 03, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S606.IS S606 pbinns on DSKJLVW7X2PROD with BILLS 2 •S 606 IS SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Restructuring Environ- 2 mentally Sound Pensions in Order to Negate Disaster Act 3 of 2021’’ or the ‘‘RESPOND Act of 2021’’. 4 SEC. 2. CLIMATE CHANGE ECONOMIC COST REPORT. 5 Not later than 1 year after the date of enactment 6 of this Act, and annually thereafter, the Board of Gov- 7 ernors of the Federal Reserve System and the Securities 8 and Exchange Commission shall jointly submit to Con- 9 gress a report that projects and accounts for the economic 10 costs directly and indirectly caused by the impacts of cli- 11 mate change, which shall include an analysis of— 12 (1) the effects that climate change has on the 13 labor market, economic growth, public health, and 14 other broad areas of the economy of the United 15 States; 16 (2) property and land damage from rising sea 17 levels and extreme weather; and 18 (3) the costs associated with natural disaster 19 relief and mitigation. 20 SEC. 3. FEDERAL ADVISORY PANEL ON THE ECONOMICS OF 21 CLIMATE CHANGE. 22 (a) ESTABLISHMENT.—The Federal Retirement 23 Thrift Investment Board (referred to in this section as the 24 ‘‘Board’’) shall establish a panel to be known as the ‘‘Fed- 25 VerDate Sep 11 2014 18:41 Apr 03, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S606.IS S606 pbinns on DSKJLVW7X2PROD with BILLS 3 •S 606 IS eral Advisory Panel on the Economics of Climate Change’’ 1 (referred to in this section as the ‘‘Advisory Panel’’). 2 (b) MEMBERSHIP.— 3 (1) IN GENERAL.—The Advisory Panel shall 4 consist of 9 members, appointed by the Board as fol- 5 lows: 6 (A) Three members shall be chosen from 7 among persons generally recognized for their 8 impartiality, knowledge, and experience in the 9 field of labor relations and pay policy. 10 (B) Six members shall be chosen from 11 among persons with expertise in local, national, 12 or transnational financing that seeks to support 13 mitigation and adaptation actions to combat cli- 14 mate change. 15 (2) LIMITATION.—Not more than 3 members of 16 the Advisory Panel may represent a single employee 17 organization, council, federation, alliance, associa- 18 tion, or affiliation of employee organizations. 19 (3) CHAIR.—The Board shall select a member 20 of the Advisory Panel appointed under paragraph 21 (1)(A) to serve as the Chair of the Advisory Panel. 22 (4) COMPENSATION.— 23 (A) IN GENERAL.—A member of the Advi- 24 sory Panel— 25 VerDate Sep 11 2014 18:41 Apr 03, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S606.IS S606 pbinns on DSKJLVW7X2PROD with BILLS 4 •S 606 IS (i) may not receive pay by reason of 1 the service of the member on the Advisory 2 Panel; and 3 (ii) shall not be considered to be an 4 employee of the Federal Government solely 5 because of the service of the member on 6 the Advisory Panel. 7 (B) EXPENSES.—Notwithstanding sub- 8 paragraph (A), a member of the Advisory Panel 9 appointed under paragraph (1)(A) may be paid 10 expenses in accordance with section 5703 of 11 title 5, United States Code. 12 (c) DUTIES.—The Advisory Panel shall— 13 (1) advise the Board on how, consistent with 14 the fiduciary duties of the Board, the Board can 15 make investments in a manner that helps ensure 16 that the United States achieves net zero greenhouse 17 gas emissions not later than 2050; 18 (2) identify possible investment opportunities in 19 clean and renewable energy and other emerging in- 20 dustries that would maximize returns; 21 (3) produce a comparative analysis comparing 22 the fiduciary efficacy and responsibility of existing 23 investment practices of the Board with the invest- 24 ment strategies described in paragraph (1); and 25 VerDate Sep 11 2014 18:41 Apr 03, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S606.IS S606 pbinns on DSKJLVW7X2PROD with BILLS 5 •S 606 IS (4) advise the Board on how to identify, assess, 1 and manage the investment risks and opportunities 2 of climate change and prepare for a transition to a 3 low-carbon economy. 4 (d) EXAMINATION.— 5 (1) IN GENERAL.—In carrying out the duties of 6 the Advisory Panel under subsection (c), the Advi- 7 sory Panel shall examine the following: 8 (A) Economic and policy challenges facing 9 the fossil fuel industry over the short, medium, 10 and long term. 11 (B) Quantitative and qualitative analysis 12 and modeling of the economic impact of climate 13 change on Federal employee retirement pro- 14 grams, including diversification of investments, 15 risk tolerance, future economic and workforce 16 trends, new opportunities, expected losses, and 17 returns. 18 (C) The current state of, and outlook for, 19 clean energy, including possible investment op- 20 portunities. 21 (D) The experiences, including perform- 22 ance analyses, of other pension funds and inves- 23 tors that have undertaken concerted strategic 24 efforts to divest from fossil fuel holdings in 25 VerDate Sep 11 2014 18:41 Apr 03, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S606.IS S606 pbinns on DSKJLVW7X2PROD with BILLS 6 •S 606 IS order to maximize the efficacy and stability of 1 their assets while minimizing their climate-re- 2 lated risk exposure. 3 (E) Strategic options to address climate- 4 related investment risks through further efforts 5 to divest from fossil fuel holdings, including— 6 (i) transitioning to a low-carbon or 7 carbon-free benchmark index for all public 8 equities; 9 (ii) divesting from significant fossil 10 fuel holdings that are not responsible fidu- 11 ciary investments for beneficiaries; and 12 (iii) exploring the use of organizations 13 to de-risk investments in carbon dependent 14 funds. 15 (2) REPORT.—Not later than 2 years after the 16 date of enactment of this Act, the Advisory Panel 17 shall submit to the Board a report containing the 18 findings of the Advisory Panel, including the results 19 of the examinations performed under paragraph (1). 20 (e) CONSULTATION WITH FEMA.—The Advisory 21 Panel shall, in preparing the report required under sub- 22 section (d)(2), consult with the Administrator of the Fed- 23 eral Emergency Management Agency on any matters with- 24 in the jurisdiction of that Agency. 25 VerDate Sep 11 2014 18:41 Apr 03, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S606.IS S606 pbinns on DSKJLVW7X2PROD with BILLS 7 •S 606 IS (f) REVIEW OF REPORT.— 1 (1) IN GENERAL.—If the Board, after reviewing 2 the report submitted by the Advisory Panel under 3 subsection (d)(2), determines that it would be finan- 4 cially profitable, and consistent with the fiduciary 5 duties of the Board, to implement low-carbon invest- 6 ment strategies, the Board shall establish a plan to 7 transition the investment practices of the Board ac- 8 cordingly. 9 (2) REPORT TO CONGRESS.—The Board shall 10 submit to Congress, including to the Office of the 11 Law Revision Counsel of the House of Representa- 12 tives, a report regarding the determination of the 13 Board under paragraph (1), including if the Board 14 is unable to determine that it would be financially 15 profitable, and consistent with the fiduciary duties of 16 the Board, to implement low-carbon investment 17 strategies. 18 (g) TERMINATION.—Notwithstanding section 14 of 19 the Federal Advisory Committee Act (5 U.S.C. App.), the 20 Advisory Panel shall terminate upon submitting the report 21 required under subsection (d)(2). 22 (h) AUTHORIZATION OF APPROPRIATIONS.—There 23 are authorized to be appropriated not more than 24 $2,000,000 for the Advisory Panel to comply with the re- 25 VerDate Sep 11 2014 18:41 Apr 03, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S606.IS S606 pbinns on DSKJLVW7X2PROD with BILLS 8 •S 606 IS quirements of the Federal Advisory Committee Act (5 1 U.S.C. App.), including by ensuring that the Advisory 2 Panel will have— 3 (1) adequate staff and quarters; and 4 (2) funds available to meet the other necessary 5 expenses of the Advisory Panel. 6 SEC. 4. CLIMATE CHOICE STOCK INDEX FUND. 7 (a) IN GENERAL.—Section 8438 of title 5, United 8 States Code, is amended— 9 (1) in subsection (a)— 10 (A) by redesignating paragraphs (4) 11 through (10) as paragraphs (7) through (13), 12 respectively; 13 (B) by redesignating paragraphs (1), (2), 14 and (3) as paragraphs (2), (4), and (5), respec- 15 tively; 16 (C) by inserting before paragraph (2), as 17 so redesignated, the following: 18 ‘‘(1) the term ‘Climate Choice Stock Index 19 Fund’ means the Climate Choice Stock Index Fund 20 established under subsection (b)(1)(G);’’; 21 (D) by inserting after paragraph (2), as so 22 redesignated, the following: 23 ‘‘(3) the term ‘entity’ means any sole propri- 24 etorship, organization, association, corporation, part- 25 VerDate Sep 11 2014 18:41 Apr 03, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S606.IS S606 pbinns on DSKJLVW7X2PROD with BILLS 9 •S 606 IS nership, joint venture, limited partnership, limited li- 1 ability partnership, limited liability company, or 2 other business association, including any wholly 3 owned subsidiary, majority-owned subsidiary, par- 4 ent-country national, or affiliate of the business as- 5 sociation, that exists for the purpose of making prof- 6 it;’’; and 7 (E) by inserting after paragraph (5), as so 8 redesignated, the following: 9 ‘‘(6) the term ‘fossil fuel entity’ means any en- 10 tity— 11 ‘‘(A) with proven carbon reserves; or 12 ‘‘(B) that explores for, extracts, processes, 13 refines, or transmits coal, oil, gas, oil shale, or 14 tar sands;’’; and 15 (2) in subsection (b)— 16 (A) in paragraph (1)— 17 (i) in subparagraph (E), by striking 18 ‘‘and’’ at the end; 19 (ii) in subparagraph (F), by striking 20 the period at the end and inserting ‘‘; 21 and’’; and 22 (iii) by adding at the end the fol- 23 lowing: 24 VerDate Sep 11 2014 18:41 Apr 03, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S606.IS S606 pbinns on DSKJLVW7X2PROD with BILLS 10 •S 606 IS ‘‘(G) a Climate Choice Stock Index Fund 1 as provided in paragraph (6).’’; and 2 (B) by adding at the end the following: 3 ‘‘(6)(A) The Board shall select an index which 4 is a commonly recognized index comprised of com- 5 mon stock. 6 ‘‘(B) The historical performance of the index 7 selected under subparagraph (A) shall be comparable 8 to that of the other investment funds and options 9 available under this subsection. 10 ‘‘(C) The Climate Choice Stock Index Fund 11 shall be invested in a portfolio that is designed— 12 ‘‘(i) to replicate the performance of the 13 index selected under subparagraph (A); 14 ‘‘(ii) such that, to the extent practicable, 15 the percentage of the Climate Choice Stock 16 Index Fund that is invested in each stock is the 17 same as the percentage determined by dividing 18 the aggregate market value of all shares of that 19 stock by the aggregate market value of all 20 shares of all stocks included in the index se- 21 lected under subparagraph (A); and 22 ‘‘(iii) to ensure that no investment in the 23 portfolio is an investment with respect to a fos- 24 sil fuel entity.’’. 25 VerDate Sep 11 2014 18:41 Apr 03, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S606.IS S606 pbinns on DSKJLVW7X2PROD with BILLS 11 •S 606 IS (b) EFFECTIVE DATE.—The amendments made by 1 subsection (a) shall take effect— 2 (1) only if the Federal Retirement Thrift In- 3 vestment Board, in the report submitted under sec- 4 tion 3(f)(2), indicates that the Board is unable to 5 determine that it would be financially profitable, and 6 consistent with the fiduciary duties of the Board, to 7 implement low-carbon investment strategies; and 8 (2) on the date on which the Board submits the 9 report described in paragraph (1). 10 Æ VerDate Sep 11 2014 18:41 Apr 03, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6301 E:\BILLS\S606.IS S606 pbinns on DSKJLVW7X2PROD with BILLS