Full Text of HB5201 103rd General Assembly
HB5201 103RD GENERAL ASSEMBLY | | | 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. |
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| | A BILL FOR |
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| 1 | | AN ACT concerning finance. | 2 | | Be it enacted by the People of the State of Illinois, | 3 | | represented in the General Assembly: | 4 | | (30 ILCS 238/Act rep.) | 5 | | Section 5. The Illinois Sustainable Investing Act is | 6 | | repealed. | 7 | | Section 10. The Public Funds Investment Act is amended by | 8 | | changing 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 | 12 | | governed by a written investment policy adopted by the public | 13 | | agency. The level of detail and complexity of the investment | 14 | | policy shall be appropriate to the nature of the funds, the | 15 | | purpose for the funds, and the amount of the public funds | 16 | | within the investment portfolio. The policy shall address | 17 | | safety of principal, liquidity of funds, and return on | 18 | | investment and shall require that the investment portfolio be | 19 | | structured in such manner as to provide sufficient liquidity | 20 | | to pay obligations as they come due. In addition, the | 21 | | investment 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 | 20 | | statement that material, relevant, and decision-useful | 21 | | sustainability factors have been or are regularly considered | 22 | | by the agency, within the bounds of financial and fiduciary | 23 | | prudence, in evaluating investment decisions. Such factors | 24 | | include, but are not limited to: (i) corporate governance and | 25 | | leadership factors; (ii) environmental factors; (iii) social | 26 | | capital factors; (iv) human capital factors; and (v) business |
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| 1 | | model and innovation factors, as provided under the Illinois | 2 | | Sustainable Investing Act. | 3 | | (b) For purposes of the State or a county, the investment | 4 | | policy shall be adopted by the elected treasurer and presented | 5 | | to the chief executive officer and the governing body. For | 6 | | purposes of any other public agency, the investment policy | 7 | | shall be adopted by the governing body of the public agency. | 8 | | (c) The investment policy shall be made available to the | 9 | | public at the main administrative office of the public agency. | 10 | | (d) The written investment policy required under this | 11 | | Section 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 | 14 | | changing Sections 1-113.6, 1-113.17, 15-177.6, 16-189, and | 15 | | 22A-113.5 as follows: | 16 | | (40 ILCS 5/1-113.6) | 17 | | Sec. 1-113.6. Investment policies. Every board of trustees | 18 | | of a pension fund shall adopt a written investment policy and | 19 | | file a copy of that policy with the Department of Insurance | 20 | | within 30 days after its adoption. Whenever a board changes | 21 | | its investment policy, it shall file a copy of the new policy | 22 | | with the Department within 30 days. | 23 | | The investment policy shall include a statement that | 24 | | material, relevant, and decision-useful sustainability factors |
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| 1 | | have been or are regularly considered by the board, within the | 2 | | bounds of financial and fiduciary prudence, in evaluating | 3 | | investment decisions. Such factors include, but are not | 4 | | limited to: (1) corporate governance and leadership factors; | 5 | | (2) environmental factors; (3) social capital factors; (4) | 6 | | human capital factors; and (5) business model and innovation | 7 | | factors, as provided under the Illinois Sustainable Investing | 8 | | Act. | 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 | 12 | | retirement system, pension fund, or investment board subject | 13 | | to this Code shall adopt a written investment policy and file a | 14 | | copy of that policy with the Department of Insurance within 30 | 15 | | days after its adoption. Whenever a board changes its | 16 | | investment policy, it shall file a copy of the new policy with | 17 | | the Department within 30 days. | 18 | | The investment policy shall include material, relevant, | 19 | | and decision-useful sustainability factors to be considered by | 20 | | the board, within the bounds of financial and fiduciary | 21 | | prudence, in evaluating investment decisions. Such factors | 22 | | shall include, but are not limited to: (1) corporate | 23 | | governance and leadership factors; (2) environmental factors; | 24 | | (3) social capital factors; (4) human capital factors; and (5) | 25 | | business model and innovation factors, as provided under the |
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| 1 | | Illinois 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 | 5 | | or before September 1, 2023, and annually thereafter, the | 6 | | Board shall publish its guidelines for voting proxy ballots . | 7 | | and a detailed report on its website describing how the Board | 8 | | is considering sustainability factors as defined in the | 9 | | Illinois 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 | 4 | | before September 1, 2023, and annually thereafter, the Board | 5 | | shall publish its guidelines for voting proxy ballots . and a | 6 | | detailed report on its website describing how the Board is | 7 | | considering sustainability factors as defined in the Illinois | 8 | | Sustainable 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 | 3 | | or before September 1, 2023, and annually thereafter, the | 4 | | Board shall publish its guidelines for voting proxy ballots . | 5 | | and a detailed report on its website describing how the Board | 6 | | is considering sustainability factors as defined in the | 7 | | Illinois 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.) |
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