WASHINGTON, D.C. – Oregon’s Senator Jeff Merkley today introduced the Retirement Investments for a Sustainable Economy (RISE) Act of 2019, which gives federal employees the ability to divest from the fossil fuel industry—and reduce the financial liability of fossil fuel asset losses—by offering a Climate Choice investment option for the Thrift Savings Plan (TSP).
“Americans are seeing the growing climate crisis driving catastrophic wildfires, deadly storms and hurricanes, and devastating droughts, and lots of people don’t want to wait around for these risks to grow,” said Merkley. “If people want to get their money out of the industry driving climate chaos, they should be able to. It’s time for Congress to give millions of federal employees the power to ensure their retirement funds are invested in a less risky and more sustainable, socially responsible portfolio.”
In recent years, the fossil fuel divestment movement has rapidly expanded around the world. In January 2018, New York City officials set a goal of divesting New York’s $189 billion in pension funds from fossil fuel companies within five years. In July 2018, Ireland became the world’s first country to fully divest from fossil fuels. Globally, over 1,000 institutions have divested nearly $6.25 trillion from fossil fuels, and approximately 60,000 individuals have divested over $5 billion.
“When federal employees save for their futures, they shouldn’t be forced to support the fossil fuel industry and fuel the climate crisis in the process,” said Sierra Club Associate Legislative Director Matthew Gravatt. “The Sierra Club applauds Senator Merkley for his leadership in giving workers more flexibility to align their investments with their values.”
“Fossil fuel divestment is an essential tool in the fight against climate change, undercutting the political and financial might of an industry hell bent on pushing us past tipping points of no return. But divestment isn’t just a moral choice, it’s a prudent financial decision consistent with fiduciary duty,” said Divest Invest Director Clara Vondrich. “Fossil fuel stocks are underperforming and volatile, an increasingly risky bet. The RISE Act will give federal workers a chance to protect their pensions against the looming carbon bubble — all while protecting the planet.”
Studies have shown that portfolios without fossil fuels have outperformed those with fossil fuels in recent years. That is why in April 2019, Senator Merkley and Senator Maggie Hassan (D-NH) wrote a letter to the U.S. Government Accountability Office (GAO) to examine the risks to federal workers of continuing fossil fuel investments as climate chaos continues to intensify.
The RISE Act would create a Climate Choice stock option under the TSP that is free from investment in fossil fuel companies. While the TSP—the equivalent of a 401(k) for federal employees—currently offers investors options for the amount and risk allocation of their TSP accounts, it does not offer federal employees any control over the types of industries in which their money is invested.
Creating a fossil-fuel free option would not only allow TSP participants the ability to align their retirement investments with their values; it could also help participants mitigate their own financial risks. As the climate threat grows and more and more of the world transitions to clean and renewable energy, holding shares in fossil fuel companies may risk bigger and bigger losses for investors.
As of December 2018, the TSP has approximately 5.5 million participants with approximately $558 billion in assets, and is the largest defined contribution plan in the world.
A copy of the RISE Act of 2019 can be found here.