On Nov. 25, Senator Ted Cruz (R-Texas) proposed legislation affecting the federal Thrift Savings Plan (TSP), the retirement program for civilian federal employees and active-duty service members. The proposal would bar the firms that manage TSP assets—primarily BlackRock and State Street—from casting shareholder votes tied to those holdings.
Cruz said he wants to stop the firms from using TSP shares to support proposals related to environmental, social, and governance (ESG) issues and diversity, equity, and inclusion (DEI) initiatives. The bill states that the restriction covers all proxy voting the asset managers conduct on behalf of the TSP.
The Thrift Savings Plan recently passed $1 trillion in assets. For comparison, CalPERS, the California Public Employee's Retirement System, reported $556.2 billion for the same period. This scale gives the TSP substantial influence in corporate elections and shareholder proposals, and restricting proxy voting would change how one of the country’s largest retirement programs is represented in those decisions.
Cruz’s bill comes amidst ongoing policy debates about how large asset managers should participate in corporate governance when they handle public retirement funds. Shifting proxy authority away from BlackRock and State Street would change how TSP-held shares are voted.
BlackRock and State Street have been central to several developments this year involving proxy voting and climate-related investment pledges. In September, BlackRock reported that they supported less than 2% of the ESG proposals that they voted on, marking the fourth straight year of decline. In early November, State Street withdrew the U.S. arm of its business from the Net Zero Asset Managers initiative, a voluntary coalition in which asset managers pledge to work toward net-zero emissions across their portfolios.
Ballotpedia tracks support for and opposition to the environmental, social, and corporate governance (ESG) investing movement. To learn more about arguments for, against, and about ESG, click here. For more information on reform proposals related to ESG policy, click here.
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