The Trump administration has not embraced ESG investing much in recent years through guidance and executive orders. But industry experts note that it did use some ESG principles when directing the board overseeing the nation's largest retirement system to halt long-standing plans to shift federal employees' retirement assets into an index fund that includes Chinese companies.
Following two letters from administration officials on May 11 urging it to reverse course, the Federal Retirement Thrift Investment Board, Washington, voted unanimously on May 13 to pause the shift of the $593.7 billion Thrift Savings Plan's I Fund benchmark to the MSCI ACWI ex-U.S. Investible Market index from the MSCI EAFE index. Board members first approved the move in 2017 and reaffirmed the decision late last year.
The board oversees the TSP, the retirement system for 5.9 million federal employees and members of the uniformed services.
The new index would provide participants with greater exposure to emerging markets and Canada and offered a higher return/lower risk profile than the current index, Michael D. Kennedy, chairman of the FRTIB, told lawmakers last year after some raised objections.
TSP's I Fund had $54.3 billion in assets as of Dec. 31.
The letters — one from Larry Kudlow, director of the National Economic Council, and Robert O'Brien, national security adviser, to Labor Secretary Eugene Scalia, and the other from Mr. Scalia to the FRTIB's Mr. Kennedy — referenced "national security and humanitarian concerns for the United States" as reasons why the board should stop the shift.