Get Fossil Fuels Out of Our Pension, Say Environmental Protection Workers

Not long ago, workers at the Environmental Protection Agency were battling the Trump Administration’s many attempts to interfere with both their agency’s mission and their rights on the job.

Under Trump, the EPA reduced union officials’ official time, restricted the ability to bring grievances, and took away office, meeting, and storage space. Now, with most of those changes undone and the Trump era behind them, EPA workers have begun to work towards a different goal: divesting their federal retirement investment program—the world’s largest defined-contribution plan—from fossil fuel stocks.

“For EPA employees, this is something that is near and dear to our hearts,” said Nicole Cantello, an EPA lawyer and president of Government Employees (AFGE) Local 704.

EPA workers issue and enforce regulations, make grants, conduct research and education, and provide technical assistance for environmental cleanup. They’re probably more aware than most workers of the urgency of the climate crisis, given that they collect greenhouse gas data, regulate vehicle emissions, and educate the public about the issue.

Even limiting global warming to 1.5 degrees Celsius above pre-industrial levels—the goal of the 2015 Paris Climate Agreement—will result, according to a landmark 2018 U.N. report, in heat waves, more droughts, more intense hurricanes and flooding, a rise in sea levels, harm to ecosystems, lower food crop yields, deforestation, and other damaging consequences.

An increase of 2 degrees or more will have far more devastating effects.

So it’s no wonder EPA workers aren’t happy, about, as Cantello put it, “being forced to invest in instruments that have fossil fuels and [greenhouse gas] emissions that are attached them.”

FEDERAL PENSION FUND

They’re not the only ones in the pension plan, of course. The Thrift Savings Plan, a group of funds similar to a 401(k), manages $735 billion in investments for 6 million federal workers and military personnel.

About $442 billion of that is in index funds that track collections of stocks and bonds; the remainder is in U.S. government securities.

The TSP is one of three parts of the Federal Employees Retirement System that replaced the previous federal pension system in the mid-1980s. The government matches contributions of up to 5 percent of workers’ base salaries.

Investments by the TSP aren’t publicly disclosed, so there’s no way to know exactly how much is in fossil fuels. But “if the TSP is investing in the same way that other pension plans are, it’s very likely that somewhere between 2 to 4 percent are,” said Richard Brooks, the climate finance director at the environmental non-profit Stand, who has been supporting the divestment campaign. That’s around $10 to $20 billion.

IT’S LOSING MONEY

Change advocates like Cantello point out that fossil fuel stocks are losing money for TSP enrollees—suggesting that the fund has a financial, in addition to environmental, responsibility to workers to choose to divest.

The fund’s Board is legally obligated to act in the best financial interests of TSP enrollees and has been wary of political influence over its choices. In 2020, the Trump administration successfully pressured the Board into delaying a shift of some TSP investments into an index fund that includes some Chinese companies, highlighting this danger.

But “this is our investment money, and we have the right to say… the people we are effectively hiring to manage it should listen to us,” said Margaret McCauley, an EPA environmental engineer and a member of Government Employees (AFGE) Local 1110 out of Seattle. In her job she writes permits for activities like precipitation runoff from industrial sites.

The TSP’s funds are primarily managed by BlackRock, the world’s largest asset manager and a major fossil fuel investor with about $100 billion in coal, oil, and gas as of last September. The company manages between 80 and 90 percent of the four TSP funds that are invested in private companies (the other is made up of government securities).

Even Black Rock is moving its non-TSP funds out of the fossil fuel sector, because dirty energy has done worse than the rest of the market in recent years. The decision about TSP funds, though, is in the hands of the five-member Federal Retirement Thrift Investment Board.

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“This is about maximizing the returns of federal workers’ retirement, and it’s about upholding our commitment to the Paris Climate Accord that all the nations of the earth agreed upon,” said Jonathan Reston, an EPA employee who requested a pseudonym.

The 2015 Paris Climate Agreement is a legally binding treaty signed by nearly every country in the world that commits nations to put the world on a 1.5℃ temperature increase trajectory.

The Obama Administration signed it. The Trump administration withdrew the U.S. from it last November—the earliest date it could legally do so. The Biden administration rejoined in its earliest days.

‘PRACTICE BEING UNION’

At least three concurrent efforts, each with a slightly different take on divestment and the use of the TSP’s power as a major pension fund, have fed into this latest round of organizing by federal employees around their retirement portfolios. While led by EPA employees, they include participation by workers from the Department of Energy, National Oceanic and Atmospheric Administration, and Army Corps of Engineers as well.

Most of these efforts are just getting off the ground, but they are contributing to a growing push that appears to be having an effect: they convinced the union, Government Employees (AFGE), to back them. And President Biden recently ordered a look into the matter.

McCauley initiated one effort when she organized an open letter last summer asking for an “environmentally and socially responsible” investment option; 125 federal workers signed on.

She said the work has been challenging because “the people I work with are still really scared,” having been “demoralized and battered from the last four years.”

But McCauley sees the divestment campaign as kind of a practice run for union activities more centered on the shop floor.

“These kinds of things are a way to practice being a union, being united, having a voice,” she said, “around things that are a little less awkward than ‘We really need to get rid of this manager.’”

SEVERAL PATHS TO WIN

Cantello started another divestment initiative; it initially began a few years ago, though it’s only restarted recently.

She has been working with AFGE members at other agencies, managerial staff at EPA, and experts in pension fund divestment to move the agenda forward.

They have identified multiple paths to divestment. One way is to ask President Biden to fill the five-member Board with supporters; there’s currently one vacant seat, and the terms of the other four members are expired.

Another way would be to enact the RESPOND Act. This legislation would require the Board to establish a climate advisory panel and make plans to divest if the Board determined that it would benefit enrollees financially. Even if not, the Board would have to offer a divested plan that enrollees could opt into. Merkley had offered similar legislation in 2018.

BEYOND THE EPA

Jonathan Reston is among those trying to reach out to multiple federal agencies’ workers and retirees across the country. “We’re a group of about a dozen regular people that meet on a consistent basis,” he said. Working on the divestment campaign has been his first significant union involvement, though he has been a member for seven or eight years.

Workers are circulating at least two petitions. One calls for investing only in “funds that do not contribute to climate change or deforestation” and directing BlackRock “to support shareholder resolutions on climate change mitigation and deforestation.” As of this writing it had been signed by 567 workers at at least 51 different federal agencies.