Companies on the index would have to meet strict financial criteria, among other requirements such as environmental sustainability, community involvement, safe products and “respect for human rights around the world,” according to a release from Langevin’s office.
“Making an investment in companies that are committed to corporate responsibility will have a positive impact on our financial system, while empowering federal employees to reward companies that share their values,” Langevin said in the release.
Tom Trabucco, director of external affairs at the FTIB, said the option would inject politics into TSP account investments.
“Congress wanted us to offer broad-based indexes only for the employees — not interest groups having their battles on various issues,” Trabucco said on the DorobekINSIDER.
Trabucco said Langevin’s proposal creates “winners and losers.”
FTIB’s concern is the fund would screen legal businesses, such as those that deal in alcohol, gambling or firearms.
“You end up getting in this situation where the government’s plan is discouraging people from investing in businesses that are perfectly legal,” Trabucco said.
One possible compromise is to use a “mutual fund window,” allowing individuals a certain amount of time to invest in one or many mutual funds. The individual would pay for the cost of the mutual fund themselves.