No ESG at TSP Act
Bill: S.5000 | Sponsor: Sen. Lee, Mike (R-UT)
Policy area: Government Operations and Politics

Summary:
No ESG at TSP Act
This bill prohibits investments under the Thrift Savings Plan in mutual funds that are based on environmental criteria (e.g., emissions standards), social criteria (e.g., company diversity), political criteria (e.g., political affiliations), or corporate governance criteria that differ from the standards that currently apply under law.

To amend title 5, United States Code, to prohibit investments 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 Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``No ESG at TSP Act''.

SEC. 2. PROHIBITION ON CERTAIN MUTUAL FUNDS UNDER THE THRIFT SAVINGS 
              PLAN.

    (a) Definitions.--In this section:
            (1) Board; executive director.--The terms ``Board'' and 
        ``Executive Director'' have the meanings given those terms in 
        section 8401 of title 5, United States Code.
            (2) Covered sum.--The term ``covered sum'' means any sum of 
        the Thrift Savings Fund that is invested in a mutual fund, 
        exchange-traded fund, or other investment vehicle described in 
        subparagraph (E) or (F) of section 8438(b)(5) of title 5, 
        United States Code, as added by subsection (b).
            (3) Mutual fund window.--The term ``mutual fund window'' 
        means the mutual fund window added by the Board pursuant to the 
        authorization under section 8438(b)(5) of title 5, United 
        States Code.
            (4) Participant.--The term ``participant'' has the meaning 
        given the term in section 8471 of title 5, United States Code.
            (5) Thrift savings fund.--The term ``Thrift Savings Fund'' 
        means the fund established under section 8437 of title 5, 
        United States Code.
    (b) Prohibition.--
            (1) In general.--Section 8438(b)(5) of title 5, United 
        States Code, is amended by adding at the end the following:
    ``(E) The Board may not offer through the mutual fund window any 
mutual fund, exchange-traded fund (as defined in section 270.6c-11 of 
title 17, Code of Federal Regulations, or any successor regulation), or 
other investment vehicle that invests in bonds or equities and that 
makes investment decisions based on ESG criteria, to the extent that 
those criteria are unrelated to maximizing monetary returns for 
investors.
    ``(F) The Board may not offer through the mutual fund window any 
mutual fund, exchange-traded fund (as defined in section 270.6c-11 of 
title 17, Code of Federal Regulations, or any successor regulation), or 
other investment vehicle that is marketed as making investment 
decisions based on ESG criteria.
    ``(G) In this paragraph, the term `ESG criteria' means any of the 
following criteria:
            ``(i) Environmental criteria, including--
                    ``(I) emissions, climate change, sustainability, 
                environmental justice, pollution, or conservation; or
                    ``(II) whether a company is engaged in the 
                exploration, production, utilization, transportation, 
                sale, or manufacturing of fossil fuel-based energy.
            ``(ii) Social criteria, including--
                    ``(I) diversity criteria, including--
                            ``(aa) the sex, race, ethnicity, gender 
                        identity, sexual orientation, or socioeconomic 
                        status of the owners, board members, employees, 
                        or customers of companies; or
                            ``(bb) whether the board members, 
                        employees, or customers described in item (aa) 
                        are members of a labor organization (as that 
                        term is defined in section 2 of the National 
                        Labor Relations Act (29 U.S.C. 152)); or
                    ``(II) whether a company is engaged in the 
                manufacture, transportation, or sale of firearms, 
                firearms accessories, or ammunition.
            ``(iii) Political criteria, including the perceived or 
        actual political affiliations, donations, or associations of 
        companies.
            ``(iv) Criteria for corporate governance standards that 
        differ from the applicable standards required under State and 
        Federal law, as in effect on the date of enactment of this 
        subparagraph.''.
            (2) Review and removal.--The Executive Director shall 
        establish a process through which, during the period beginning 
        on the date of enactment of this Act and ending on the 
        effective date described in subsection (c), members of the 
        Board shall--
                    (A) identify investment vehicles that--
                            (i) were added to the mutual fund window 
                        pursuant to the rule entitled ``Mutual Fund 
                        Window'' (87 Fed. Reg. 27917 (effective June 1, 
                        2022)); and
                            (ii) would violate subparagraph (E) or (F) 
                        of section 8438(b)(5) of title 5, United States 
                        Code, as added by paragraph (1); and
                    (B) remove from the mutual fund window all 
                investment vehicles identified under subparagraph (A).
            (3) Existing investments in impermissible mutual funds.--
                    (A) Notice.--Not later than 30 days after the 
                effective date described in subsection (c), the 
                Executive Director shall notify each participant of the 
                option to make an election under subparagraph (B).
                    (B) Election.--During the 90-day period beginning 
                on the day after the date on which the 30-day period 
                described in subparagraph (A) ends, a participant may 
                elect to have any covered sums credited to the account 
                of that individual in the Thrift Savings Fund 
                reinvested in accordance with section 8438 of title 5, 
                United States Code, as amended by paragraph (1).
                    (C) Mandatory reinvestment.--Beginning on the day 
                after the date on which the 90-day period described in 
                subparagraph (B) ends, the Board shall ensure that all 
                covered sums with respect to which elections have not 
                been made under that subparagraph are invested in the 
                Government Securities Investment Fund established under 
                section 8438(b)(1)(A) of title 5, United States Code.
            (4) Enforcement.--Section 8477(e)(3) of title 5, United 
        States Code, is amended--
                    (A) in subparagraph (B)(iii), by striking ``or'' at 
                the end;
                    (B) in subparagraph (C)(ii), by striking the period 
                at the end and inserting ``; or''; and
                    (C) by adding at the end the following:
            ``(D) by any participant or beneficiary against the Board--
                    ``(i) to obtain any appropriate equitable relief to 
                redress a violation of subparagraph (E) or (F) of 
                section 8438(b)(5);
                    ``(ii) to enjoin any act or practice which violates 
                subparagraph (E) or (F) of section 8438(b)(5); or
                    ``(iii) to obtain actual or compensatory damages to 
                redress a violation of subparagraph (E) or (F) of 
                section 8438(b)(5).''.
    (c) Effective Date.--The amendments made by paragraphs (1) and (4) 
of subsection (b) shall take effect on the date that is 1 year after 
the date of enactment of this Act.
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