103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB5201

 

Introduced 2/9/2024, by Rep. Brad Halbrook

 

SYNOPSIS AS INTRODUCED:
 
30 ILCS 238/Act rep.
30 ILCS 235/2.5
40 ILCS 5/1-113.6
40 ILCS 5/1-113.17
40 ILCS 5/15-177.6
40 ILCS 5/16-189
40 ILCS 5/22A-113.5

    Repeals the Illinois Sustainable Investing Act. Amends the Public Funds Investment Act and the Illinois Pension Code to make conforming changes, including removal of sustainability factors from investment policies.


LRB103 38361 MXP 68496 b

 

 

A BILL FOR

 

HB5201LRB103 38361 MXP 68496 b

1    AN ACT concerning finance.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    (30 ILCS 238/Act rep.)
5    Section 5. The Illinois Sustainable Investing Act is
6repealed.
 
7    Section 10. The Public Funds Investment Act is amended by
8changing Section 2.5 as follows:
 
9    (30 ILCS 235/2.5)
10    Sec. 2.5. Investment policy.
11    (a) Investment of public funds by a public agency shall be
12governed by a written investment policy adopted by the public
13agency. The level of detail and complexity of the investment
14policy shall be appropriate to the nature of the funds, the
15purpose for the funds, and the amount of the public funds
16within the investment portfolio. The policy shall address
17safety of principal, liquidity of funds, and return on
18investment and shall require that the investment portfolio be
19structured in such manner as to provide sufficient liquidity
20to pay obligations as they come due. In addition, the
21investment policy shall include or address the following:
22        (1) a listing of authorized investments;

 

 

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1        (2) a rule, such as the "prudent person rule",
2    establishing the standard of care that must be maintained
3    by the persons investing the public funds;
4        (3) investment guidelines that are appropriate to the
5    nature of the funds, the purpose for the funds, and the
6    amount of the public funds within the investment
7    portfolio;
8        (4) a policy regarding diversification of the
9    investment portfolio that is appropriate to the nature of
10    the funds, the purpose for the funds, and the amount of the
11    public funds within the investment portfolio;
12        (5) guidelines regarding collateral requirements, if
13    any, for the deposit of public funds in a financial
14    institution made pursuant to this Act, and, if applicable,
15    guidelines for contractual arrangements for the custody
16    and safekeeping of that collateral;
17        (6) a policy regarding the establishment of a system
18    of internal controls and written operational procedures
19    designed to prevent losses of funds that might arise from
20    fraud, employee error, misrepresentation by third parties,
21    or imprudent actions by employees of the entity;
22        (7) identification of the chief investment officer who
23    is responsible for establishing the internal controls and
24    written procedures for the operation of the investment
25    program;
26        (8) performance measures that are appropriate to the

 

 

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1    nature of the funds, the purpose for the funds, and the
2    amount of the public funds within the investment
3    portfolio;
4        (9) a policy regarding appropriate periodic review of
5    the investment portfolio, its effectiveness in meeting the
6    public agency's needs for safety, liquidity, rate of
7    return, and diversification, and its general performance;
8        (10) a policy establishing at least quarterly written
9    reports of investment activities by the public agency's
10    chief financial officer for submission to the governing
11    body and chief executive officer of the public agency. The
12    reports shall include information regarding securities in
13    the portfolio by class or type, book value, income earned,
14    and market value as of the report date;
15        (11) a policy regarding the selection of investment
16    advisors, money managers, and financial institutions; and
17        (12) a policy regarding ethics and conflicts of
18    interest.
19    (a-5) (Blank). The investment policy shall include a
20statement that material, relevant, and decision-useful
21sustainability factors have been or are regularly considered
22by the agency, within the bounds of financial and fiduciary
23prudence, in evaluating investment decisions. Such factors
24include, but are not limited to: (i) corporate governance and
25leadership factors; (ii) environmental factors; (iii) social
26capital factors; (iv) human capital factors; and (v) business

 

 

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1model and innovation factors, as provided under the Illinois
2Sustainable Investing Act.
3    (b) For purposes of the State or a county, the investment
4policy shall be adopted by the elected treasurer and presented
5to the chief executive officer and the governing body. For
6purposes of any other public agency, the investment policy
7shall be adopted by the governing body of the public agency.
8    (c) The investment policy shall be made available to the
9public at the main administrative office of the public agency.
10    (d) The written investment policy required under this
11Section shall be developed and implemented by January 1, 2000.
12(Source: P.A. 101-473, eff. 1-1-20.)
 
13    Section 15. The Illinois Pension Code is amended by
14changing Sections 1-113.6, 1-113.17, 15-177.6, 16-189, and
1522A-113.5 as follows:
 
16    (40 ILCS 5/1-113.6)
17    Sec. 1-113.6. Investment policies. Every board of trustees
18of a pension fund shall adopt a written investment policy and
19file a copy of that policy with the Department of Insurance
20within 30 days after its adoption. Whenever a board changes
21its investment policy, it shall file a copy of the new policy
22with the Department within 30 days.
23    The investment policy shall include a statement that
24material, relevant, and decision-useful sustainability factors

 

 

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1have been or are regularly considered by the board, within the
2bounds of financial and fiduciary prudence, in evaluating
3investment decisions. Such factors include, but are not
4limited to: (1) corporate governance and leadership factors;
5(2) environmental factors; (3) social capital factors; (4)
6human capital factors; and (5) business model and innovation
7factors, as provided under the Illinois Sustainable Investing
8Act.
9(Source: P.A. 101-473, eff. 1-1-20.)
 
10    (40 ILCS 5/1-113.17)
11    Sec. 1-113.17. Investment policies sustainability. Every
12retirement system, pension fund, or investment board subject
13to this Code shall adopt a written investment policy and file a
14copy of that policy with the Department of Insurance within 30
15days after its adoption. Whenever a board changes its
16investment policy, it shall file a copy of the new policy with
17the Department within 30 days.
18    The investment policy shall include material, relevant,
19and decision-useful sustainability factors to be considered by
20the board, within the bounds of financial and fiduciary
21prudence, in evaluating investment decisions. Such factors
22shall include, but are not limited to: (1) corporate
23governance and leadership factors; (2) environmental factors;
24(3) social capital factors; (4) human capital factors; and (5)
25business model and innovation factors, as provided under the

 

 

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1Illinois Sustainable Investing Act.
2(Source: P.A. 101-473, eff. 1-1-20.)
 
3    (40 ILCS 5/15-177.6)
4    Sec. 15-177.6. Voting proxy ballots Fiduciary report. On
5or before September 1, 2023, and annually thereafter, the
6Board shall publish its guidelines for voting proxy ballots.
7and a detailed report on its website describing how the Board
8is considering sustainability factors as defined in the
9Illinois Sustainable Investing Act. The report shall:
10        (1) describe the Board's strategy as it relates to the
11    consideration of sustainable investment factors;
12        (2) outline the process for regular assessment across
13    the total portfolio of potential effects from systemic and
14    regulatory risks and opportunities, including, but not
15    limited to, sustainability factors on the assets of the
16    plan;
17        (3) disclose how each investment manager serving as a
18    fiduciary to the Board integrates sustainability factors
19    into the investment manager's investment decision-making
20    process;
21        (4) provide a comprehensive proxy voting report;
22        (5) provide an overview of all corporate engagement
23    and stewardship activities; and
24        (6) include any other information the Board deems
25    necessary.

 

 

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1(Source: P.A. 103-468, eff. 8-4-23.)
 
2    (40 ILCS 5/16-189)
3    Sec. 16-189. Voting proxy ballots Fiduciary report. On or
4before September 1, 2023, and annually thereafter, the Board
5shall publish its guidelines for voting proxy ballots. and a
6detailed report on its website describing how the Board is
7considering sustainability factors as defined in the Illinois
8Sustainable Investing Act. The report shall:
9        (1) describe the Board's strategy as it relates to the
10    consideration of sustainable investment factors;
11        (2) outline the process for regular assessment across
12    the total portfolio of potential effects from systemic and
13    regulatory risks and opportunities, including, but not
14    limited to, sustainability factors on the assets of the
15    plan;
16        (3) disclose how each investment manager serving as a
17    fiduciary to the Board integrates sustainability factors
18    into the investment manager's investment decision-making
19    process;
20        (4) provide a comprehensive proxy voting report;
21        (5) provide an overview of all corporate engagement
22    and stewardship activities; and
23        (6) include any other information the Board deems
24    necessary.
25(Source: P.A. 103-468, eff. 8-4-23.)
 

 

 

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1    (40 ILCS 5/22A-113.5)
2    Sec. 22A-113.5. Voting proxy ballots Fiduciary report. On
3or before September 1, 2023, and annually thereafter, the
4Board shall publish its guidelines for voting proxy ballots.
5and a detailed report on its website describing how the Board
6is considering sustainability factors as defined in the
7Illinois Sustainable Investing Act. The report shall:
8        (1) describe the Board's strategy as it relates to the
9    consideration of sustainable investment factors;
10        (2) outline the process for regular assessment across
11    the total portfolio of potential effects from systemic and
12    regulatory risks and opportunities, including, but not
13    limited to, sustainability factors on the assets of the
14    plan;
15        (3) disclose how each investment manager serving as a
16    fiduciary to the Board integrates sustainability factors
17    into the investment manager's investment decision-making
18    process;
19        (4) provide a comprehensive proxy voting report;
20        (5) provide an overview of all corporate engagement
21    and stewardship activities; and
22        (6) include any other information the Board deems
23    necessary.
24(Source: P.A. 103-468, eff. 8-4-23.)