Rep. Jim Langevin, D-R.I., introduced the Federal Employees Responsible Investment Act on Wednesday, which would add a socially responsible investment option to the Thrift Savings Plan (TSP). TSP is the retirement savings and investment plan for federal employees.

The Act would direct the Federal Retirement Thrift Investment Board (FRTIB) to select a “Corporate Responsibility Index” as an option for TSP investment. The index would include companies that meet “strict financial criteria, in addition to having strong corporate governance, sustainable environmental policies and practices, solid workplace relations, positive community involvement, safe products, and respect for human rights around the world.”

“We must create an environment in which businesses take care of–and are held accountable to–their shareholders, employees and customers,” Langevin said in a prepared statement. “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.”

At least 17 states already allow state employees to consider socially responsible investments for retirement funds.

The congressman notes in 2009, three out of four large cap SRI mutual funds outperformed the Standard & Poor’s (S&P) 500 Index by an average of six percentage points, according to data analyzed by the Social Investment Forum, a national association made up of over 400 financial professionals and institutions.

Socially responsible portfolios grew by more than 324% from 1995 to 2007, compared with less than 260% growth in the overall universe of assets under professional management. At the beginning of 2007, SRI products represented more than $2.7 trillion in assets or one in nine dollars invested in financial markets in the United States.

“This measure would give federal employees the range of investment options that many state and private sector employees already have access to by allowing investments in at least one socially responsible index fund,” said SIF CEO Lisa Woll. “Investors are increasingly turning to socially responsible and sustainable investment (SRI) options because good corporate governance and performance on social and environmental issues are often indicators of financial success, good management and less risk. Many federal employees enter the government to pursue social and environmental goals and are looking for investment options that work toward — rather than against — achieving those goals.”

Currently, the TSP offers federal employees a choice of 10 funds. Five are funds dedicated to fixed asset classes — one dealing with government bonds and the other four tracking specific market indices — while the other five are “lifecycle” funds designed to adjust the allocation mix of investments among the individual funds depending on retirement dates. All TSP funds are trust funds that are regulated by the Office of the Comptroller of the Currency.