II 117th CONGRESS 1st Session S. 606 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 establish a Federal Advisory Panel on the Economics of Climate Change, and for other purposes.

1. Short title This Act may be cited as the Restructuring Environmentally Sound Pensions in Order to Negate Disaster Act of 2021 or the RESPOND Act of 2021 . 2. Climate change economic cost report Not later than 1 year after the date of enactment of this Act, and annually thereafter, the Board of Governors of the Federal Reserve System and the Securities and Exchange Commission shall jointly submit to Congress a report that projects and accounts for the economic costs directly and indirectly caused by the impacts of climate change, which shall include an analysis of— (1) the effects that climate change has on the labor market, economic growth, public health, and other broad areas of the economy of the United States; (2) property and land damage from rising sea levels and extreme weather; and (3) the costs associated with natural disaster relief and mitigation. 3. Federal Advisory Panel on the Economics of Climate Change (a) Establishment The Federal Retirement Thrift Investment Board (referred to in this section as the Board ) shall establish a panel to be known as the Federal Advisory Panel on the Economics of Climate Change (referred to in this section as the Advisory Panel ). (b) Membership (1) In general The Advisory Panel shall consist of 9 members, appointed by the Board as follows: (A) Three members shall be chosen from among persons generally recognized for their impartiality, knowledge, and experience in the field of labor relations and pay policy. (B) Six members shall be chosen from among persons with expertise in local, national, or transnational financing that seeks to support mitigation and adaptation actions to combat climate change. (2) Limitation Not more than 3 members of the Advisory Panel may represent a single employee organization, council, federation, alliance, association, or affiliation of employee organizations. (3) Chair The Board shall select a member of the Advisory Panel appointed under paragraph (1)(A) to serve as the Chair of the Advisory Panel. (4) Compensation (A) In general A member of the Advisory Panel— (i) may not receive pay by reason of the service of the member on the Advisory Panel; and (ii) shall not be considered to be an employee of the Federal Government solely because of the service of the member on the Advisory Panel. (B) Expenses Notwithstanding subparagraph (A), a member of the Advisory Panel appointed under paragraph (1)(A) may be paid expenses in accordance with section 5703 of title 5, United States Code. (c) Duties The Advisory Panel shall— (1) advise the Board on how, consistent with the fiduciary duties of the Board, the Board can make investments in a manner that helps ensure that the United States achieves net zero greenhouse gas emissions not later than 2050; (2) identify possible investment opportunities in clean and renewable energy and other emerging industries that would maximize returns; (3) produce a comparative analysis comparing the fiduciary efficacy and responsibility of existing investment practices of the Board with the investment strategies described in paragraph (1); and (4) advise the Board on how to identify, assess, and manage the investment risks and opportunities of climate change and prepare for a transition to a low-carbon economy. (d) Examination (1) In general In carrying out the duties of the Advisory Panel under subsection (c), the Advisory Panel shall examine the following: (A) Economic and policy challenges facing the fossil fuel industry over the short, medium, and long term. (B) Quantitative and qualitative analysis and modeling of the economic impact of climate change on Federal employee retirement programs, including diversification of investments, risk tolerance, future economic and workforce trends, new opportunities, expected losses, and returns. (C) The current state of, and outlook for, clean energy, including possible investment opportunities. (D) The experiences, including performance analyses, of other pension funds and investors that have undertaken concerted strategic efforts to divest from fossil fuel holdings in order to maximize the efficacy and stability of their assets while minimizing their climate-related risk exposure. (E) Strategic options to address climate-related investment risks through further efforts to divest from fossil fuel holdings, including— (i) transitioning to a low-carbon or carbon-free benchmark index for all public equities; (ii) divesting from significant fossil fuel holdings that are not responsible fiduciary investments for beneficiaries; and (iii) exploring the use of organizations to de-risk investments in carbon dependent funds. (2) Report Not later than 2 years after the date of enactment of this Act, the Advisory Panel shall submit to the Board a report containing the findings of the Advisory Panel, including the results of the examinations performed under paragraph (1). (e) Consultation with FEMA The Advisory Panel shall, in preparing the report required under subsection (d)(2), consult with the Administrator of the Federal Emergency Management Agency on any matters within the jurisdiction of that Agency. (f) Review of report (1) In general If the Board, after reviewing the report submitted by the Advisory Panel under subsection (d)(2), determines that it would be financially profitable, and consistent with the fiduciary duties of the Board, to implement low-carbon investment strategies, the Board shall establish a plan to transition the investment practices of the Board accordingly. (2) Report to Congress The Board shall submit to Congress, including to the Office of the Law Revision Counsel of the House of Representatives, a report regarding the determination of the Board under paragraph (1), including if the Board is unable to determine that it would be financially profitable, and consistent with the fiduciary duties of the Board, to implement low-carbon investment strategies. (g) Termination Notwithstanding section 14 of the Federal Advisory Committee Act (5 U.S.C. App.), the Advisory Panel shall terminate upon submitting the report required under subsection (d)(2). (h) Authorization of appropriations There are authorized to be appropriated not more than $2,000,000 for the Advisory Panel to comply with the requirements of the Federal Advisory Committee Act (5 U.S.C. App.), including by ensuring that the Advisory Panel will have— (1) adequate staff and quarters; and (2) funds available to meet the other necessary expenses of the Advisory Panel. 4. Climate Choice Stock Index Fund (a) In general Section 8438 of title 5, United States Code, is amended— (1) in subsection (a)— (A) by redesignating paragraphs (4) through (10) as paragraphs (7) through (13), respectively; (B) by redesignating paragraphs (1), (2), and (3) as paragraphs (2), (4), and (5), respectively; (C) by inserting before paragraph (2), as so redesignated, the following: (1) the term Climate Choice Stock Index Fund means the Climate Choice Stock Index Fund established under subsection (b)(1)(G); ; (D) by inserting after paragraph (2), as so redesignated, the following: (3) the term entity means any sole proprietorship, organization, association, corporation, partnership, joint venture, limited partnership, limited liability partnership, limited liability company, or other business association, including any wholly owned subsidiary, majority-owned subsidiary, parent-country national, or affiliate of the business association, that exists for the purpose of making profit; ; and (E) by inserting after paragraph (5), as so redesignated, the following: (6) the term fossil fuel entity means any entity— (A) with proven carbon reserves; or (B) that explores for, extracts, processes, refines, or transmits coal, oil, gas, oil shale, or tar sands; ; and (2) in subsection (b)— (A) in paragraph (1)— (i) in subparagraph (E), by striking and at the end; (ii) in subparagraph (F), by striking the period at the end and inserting ; and ; and (iii) by adding at the end the following: (G) a Climate Choice Stock Index Fund as provided in paragraph (6). ; and (B) by adding at the end the following: (6) (A) The Board shall select an index which is a commonly recognized index comprised of common stock. (B) The historical performance of the index selected under subparagraph (A) shall be comparable to that of the other investment funds and options available under this subsection. (C) The Climate Choice Stock Index Fund shall be invested in a portfolio that is designed— (i) to replicate the performance of the index selected under subparagraph (A); (ii) such that, to the extent practicable, the percentage of the Climate Choice Stock Index Fund that is invested in each stock is the same as the percentage determined by dividing the aggregate market value of all shares of that stock by the aggregate market value of all shares of all stocks included in the index selected under subparagraph (A); and (iii) to ensure that no investment in the portfolio is an investment with respect to a fossil fuel entity. . (b) Effective date The amendments made by subsection (a) shall take effect— (1) only if the Federal Retirement Thrift Investment Board, in the report submitted under section 3(f)(2), indicates that the Board is unable to determine that it would be financially profitable, and consistent with the fiduciary duties of the Board, to implement low-carbon investment strategies; and (2) on the date on which the Board submits the report described in paragraph (1).