No ESG at TSP Act

I 118TH CONGRESS 1ST SESSION H. R. 3612 To amend title 5, United States Code, to prohibit investments under the Thrift Savings Plan in certain mutual funds that make investment deci- sions based primarily on environmental, social, or governance criteria, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MAY 23, 2023 Mr. ROY (for himself, Mr. BISHOP of North Carolina, Mr. NEHLS, Mr. BABIN, Mr. DONALDS, Mr. CRENSHAW, Mr. PERRY, Mr. GOOD of Virginia, Mr. CLOUD, Mr. CARTER of Georgia, Mr. OGLES, Mr. ROSENDALE, Mr. WEBER of Texas, Mr. BIGGS, Mr. SELF, Mr. GROTHMAN, Mrs. BOEBERT, and Mr. BRECHEEN) introduced the following bill; which was referred to the Committee on Oversight and Accountability A BILL To amend title 5, United States Code, to prohibit invest- ments under the Thrift Savings Plan in certain mutual funds that make investment decisions based primarily on environmental, social, or governance criteria, 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 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘No ESG at TSP Act’’. 4 VerDate Sep 11 2014 06:36 Jun 14, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3612.IH H3612 pbinns on DSKJLVW7X2PROD with $$_JOB 2 •HR 3612 IH SEC. 2. PROHIBITION ON CERTAIN MUTUAL FUNDS UNDER 1 THE THRIFT SAVINGS PLAN. 2 (a) DEFINITIONS.—In this section: 3 (1) BOARD; EXECUTIVE DIRECTOR.—The terms 4 ‘‘Board’’ and ‘‘Executive Director’’ have the mean- 5 ings given those terms in section 8401 of title 5, 6 United States Code. 7 (2) COVERED SUM.—The term ‘‘covered sum’’ 8 means any sum of the Thrift Savings Fund that is 9 invested in a mutual fund, exchange-traded fund, or 10 other investment vehicle described in subparagraph 11 (E) or (F) of section 8438(b)(5) of title 5, United 12 States Code, as added by subsection (b). 13 (3) MUTUAL FUND WINDOW.—The term ‘‘mu- 14 tual fund window’’ means the mutual fund window 15 added by the Board pursuant to the authorization 16 under section 8438(b)(5) of title 5, United States 17 Code. 18 (4) PARTICIPANT.—The term ‘‘participant’’ has 19 the meaning given the term in section 8471 of title 20 5, United States Code. 21 (5) THRIFT SAVINGS FUND.—The term ‘‘Thrift 22 Savings Fund’’ means the fund established under 23 section 8437 of title 5, United States Code. 24 (b) PROHIBITION.— 25 VerDate Sep 11 2014 06:36 Jun 14, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3612.IH H3612 pbinns on DSKJLVW7X2PROD with $$_JOB 3 •HR 3612 IH (1) IN GENERAL.—Section 8438(b)(5) of title 1 5, United States Code, is amended by adding at the 2 end the following: 3 ‘‘(E) The Board may not offer through the mutual 4 fund window any mutual fund, exchange-traded fund (as 5 defined in section 270.6c–11 of title 17, Code of Federal 6 Regulations, or any successor regulation), or other invest- 7 ment vehicle that invests in bonds or equities and that 8 makes investment decisions based on ESG criteria, to the 9 extent that those criteria are unrelated to maximizing 10 monetary returns for investors. 11 ‘‘(F) The Board may not offer through the mutual 12 fund window any mutual fund, exchange-traded fund (as 13 defined in section 270.6c–11 of title 17, Code of Federal 14 Regulations, or any successor regulation), or other invest- 15 ment vehicle that is marketed as making investment deci- 16 sions based on ESG criteria. 17 ‘‘(G) In this paragraph, the term ‘ESG criteria’ 18 means any of the following criteria: 19 ‘‘(i) Environmental criteria, including— 20 ‘‘(I) emissions, climate change, sustain- 21 ability, environmental justice, pollution, or con- 22 servation; or 23 ‘‘(II) whether a company is engaged in the 24 exploration, production, utilization, transpor- 25 VerDate Sep 11 2014 06:36 Jun 14, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3612.IH H3612 pbinns on DSKJLVW7X2PROD with $$_JOB 4 •HR 3612 IH tation, sale, or manufacturing of fossil fuel- 1 based energy. 2 ‘‘(ii) Social criteria, including— 3 ‘‘(I) diversity criteria, including— 4 ‘‘(aa) the sex, race, ethnicity, gender 5 identity, sexual orientation, or socio- 6 economic status of the owners, board mem- 7 bers, employees, or customers of compa- 8 nies; or 9 ‘‘(bb) whether the board members, 10 employees, or customers described in item 11 (aa) are members of a labor organization 12 (as that term is defined in section 2 of the 13 National Labor Relations Act (29 U.S.C. 14 152)); or 15 ‘‘(II) whether a company is engaged in the 16 manufacture, transportation, or sale of fire- 17 arms, firearms accessories, or ammunition. 18 ‘‘(iii) Political criteria, including the perceived 19 or actual political affiliations, donations, or associa- 20 tions of companies. 21 ‘‘(iv) Criteria for corporate governance stand- 22 ards that differ from the applicable standards re- 23 quired under State and Federal law, as in effect on 24 the date of the enactment of this subparagraph.’’. 25 VerDate Sep 11 2014 06:36 Jun 14, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3612.IH H3612 pbinns on DSKJLVW7X2PROD with $$_JOB 5 •HR 3612 IH (2) REVIEW AND REMOVAL.—The Executive Di- 1 rector shall establish a process through which, dur- 2 ing the period beginning on the date of enactment 3 of this Act and ending on the effective date de- 4 scribed in subsection (c), members of the Board 5 shall— 6 (A) identify investment vehicles that— 7 (i) were added to the mutual fund 8 window pursuant to the rule entitled ‘‘Mu- 9 tual Fund Window’’ (87 Fed. Reg. 27917 10 (effective June 1, 2022)); and 11 (ii) would violate subparagraph (E) or 12 (F) of section 8438(b)(5) of title 5, United 13 States Code, as added by paragraph (1); 14 and 15 (B) remove from the mutual fund window 16 all investment vehicles identified under subpara- 17 graph (A). 18 (3) EXISTING INVESTMENTS IN IMPERMISSIBLE 19 MUTUAL FUNDS.— 20 (A) NOTICE.—Not later than 30 days after 21 the effective date described in subsection (c), 22 the Executive Director shall notify each partici- 23 pant of the option to make an election under 24 subparagraph (B). 25 VerDate Sep 11 2014 06:36 Jun 14, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3612.IH H3612 pbinns on DSKJLVW7X2PROD with $$_JOB 6 •HR 3612 IH (B) ELECTION.—During the 90-day period 1 beginning on the day after the date on which 2 the 30-day period described in subparagraph 3 (A) ends, a participant may elect to have any 4 covered sums credited to the account of that in- 5 dividual in the Thrift Savings Fund reinvested 6 in accordance with section 8438 of title 5, 7 United States Code, as amended by paragraph 8 (1). 9 (C) MANDATORY REINVESTMENT.—Begin- 10 ning on the day after the date on which the 90- 11 day period described in subparagraph (B) ends, 12 the Board shall ensure that all covered sums 13 with respect to which elections have not been 14 made under that subparagraph are invested in 15 the Government Securities Investment Fund es- 16 tablished under section 8438(b)(1)(A) of title 5, 17 United States Code. 18 (4) ENFORCEMENT.—Section 8477(e)(3) of 19 title 5, United States Code, is amended— 20 (A) in subparagraph (B)(iii), by striking 21 ‘‘or’’ at the end; 22 (B) in subparagraph (C)(ii), by striking 23 the period at the end and inserting ‘‘; or’’; and 24 (C) by adding at the end the following: 25 VerDate Sep 11 2014 06:36 Jun 14, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3612.IH H3612 pbinns on DSKJLVW7X2PROD with $$_JOB 7 •HR 3612 IH ‘‘(D) by any participant or beneficiary 1 against the Board— 2 ‘‘(i) to obtain any appropriate equi- 3 table relief to redress a violation of sub- 4 paragraph (E) or (F) of section 5 8438(b)(5); 6 ‘‘(ii) to enjoin any act or practice 7 which violates subparagraph (E) or (F) of 8 section 8438(b)(5); or 9 ‘‘(iii) to obtain actual or compensatory 10 damages to redress a violation of subpara- 11 graph (E) or (F) of section 8438(b)(5).’’. 12 (c) EFFECTIVE DATE.—The amendments made by 13 paragraphs (1) and (4) of subsection (b) shall take effect 14 on the date that is 90 days after the date of enactment 15 of this Act. 16 Æ VerDate Sep 11 2014 06:36 Jun 14, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E:\BILLS\H3612.IH H3612 pbinns on DSKJLVW7X2PROD with $$_JOB