|
Given that Environmental Protection Agency (EPA) employees review
corporate environmental impacts in their daily work, it should
come as no surprise that almost all of them want a Socially Responsible
Investing (SRI) option that addresses these impacts in their retirement
plan. Of the 2,816 EPA workers responding to an online survey from
July 18 to Aug. 12 last year, 2,360 (or 84 percent) said they would
like to have an SRI stock index fund as an option in the Thrift
Savings Plan (TSP), the federal government employees’ retirement
plan.
The impetus for the survey dates back to 2004, when EPA Region
9’s Environmental Management System Team, at the behest of
regional employees, created a TSP subcommittee to investigate the
possibility of adding SRI options to the TSP. This subcommittee
contacted the Federal Retirement Thrift Investment Board to inquire
about this possibility.
“The subcommittee members learned that an act of Congress is necessary
to change TSP options, and that some representatives and senators look to the
board to speak for participants’ interests when considering legislation,” states
the executive summary of the survey.
Interestingly, just such an act was on the docket. On April 2, 2004, Rep. James
Langevin (D-RI) introduced the Federal Employees Responsible Investment Act to
offer an SRI index fund option in the TSP for all federal employees. Since that
day, however, the bill has not budged from the House Committee on Government
Reform, according to a spokesperson at Rep. Langevin’s office, as well
as the Library of Congress THOMAS Web site, which tracks congressional action.
Now, EPA employees wanting to align their retirement investments with their commitment
to environmental protection must continue to wait for their representatives,
senators and the board to speak for their interests. EPA Assistant Administrator
Luis Luna, who sent the survey results to Federal Retirement Thrift Investment
Board Executive Director Gary Amelio in January urging him to “take a close
look at the level of interest,” did not respond to SocialFunds.com’s
requests for commentary.
The numbers speak for themselves. Asked if they would invest in an SRI index
fund that had equal or better returns than a comparable traditional, unscreened
index fund if it were available in TSP, 97 percent indicated interest (76 percent
said “yes” and 21 percent said “maybe”). In fact, almost
a fifth (19 percent) of respondents prioritize corporate social and environmental
responsibility so highly that they invest in SRI funds outside TSP, thus foregoing
the benefits of tax deferral.
Similarly, more than a quarter of respondents (29 percent) concentrate a majority
of their TSP assets in the Government Securities Fund (or “G Fund”),
and of these, 19 percent do so because they “want to invest in companies
or sectors that are socially or environmentally responsible.” In other
words, these respondents are willing to forego the higher returns typical of
stock funds as compared to the G Fund in order to avoid exposure to companies
with weak social and environmental performance. Ironically, the G Fund exposes
investors to Treasury securities, while many SRI funds specifically avoid so-called
T-bills because they finance the Defense Department, and thus support militarism.
These investing decisions prioritizing extra-financial considerations make more
sense in light of the ranking of factors the respondents consider important in “choosing
what companies you would like your money invested in.” Top rankings went
to extra-financial considerations such as “compliance with relevant laws” (72
percent) and “environmentally responsible practices” (68 percent),
with “labor and human rights practices” (66 percent) and “corporate
governance” (64 percent) coming in fourth and fifth places. Traditional
financial considerations such as “profit growth potential” (67 percent), “dividend
yield” (44 percent) and “low risk/return profile” (28 percent)
came in third, sixth and seventh places, respectively.
So the question arises: Just when will Congress see fit to provide federal employees
with options to invest their retirement savings in ways that help protect the
environment they retire into?
This article originally appeared on www.SocialFunds.com, the largest personal
finance site devoted to socially responsible investing. William Baue works with
SRI World Group, Inc., the publisher of www.SocialFunds.com.
|
