Senate Bill Aims to Block BlackRock’s Voting Power Over Federal Retirement Funds
A new bill in the U.S. Senate seeks to block asset managers like BlackRock and State Street from voting on shares held in the federal Thrift Savings Plan (TSP). Introduced by Senator Ted Cruz, the Stop TSP ESG Act would prevent these firms from casting proxy votes on behalf of the $1 trillion pension fund. The proposal reflects growing political tensions over how retirement savings are managed in relation to environmental, social, and governance (ESG) issues.
The TSP, one of the world’s largest defined contribution systems serving over six million federal workers, currently has its assets managed primarily by BlackRock and State Street. Cruz’s bill would strip these firms of their ability to vote on any shareholder proposals tied to the TSP, regardless of the topic.
The move follows broader Republican efforts to challenge asset managers over their involvement in climate-focused investor groups. In recent months, BlackRock, State Street, and Vanguard have faced scrutiny from GOP-led states and federal offices for supporting ESG-related shareholder initiatives. Under political pressure, some firms have already scaled back their public sustainability commitments and reduced support for such proposals.
Cruz argues that these managers use their voting power to push ESG and Diversity, Equity, and Inclusion (DEI) agendas, which he claims conflict with investors’ financial interests. If passed, the bill would weaken the influence of major index managers over the TSP, potentially shifting governance power toward activist funds and other investors.
The debate highlights deep divisions in U.S. financial politics over how public retirement systems should address climate and governance risks. While the bill could shape future rulemaking on asset-manager responsibilities, there is no evidence yet that it has triggered wider fragmentation in ESG governance practices among corporate leaders or international experts.
The Stop TSP ESG Act would remove a key mechanism for large asset managers to participate in corporate governance through the TSP. Its passage could reshape how retirement savings are governed in the U.S., with implications for both financial oversight and the ongoing political debate over ESG policies. The outcome may also affect how other public pension systems approach climate and governance-related voting in the future.
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