103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB3717

 

Introduced 2/9/2024, by Sen. Adriane Johnson

 

SYNOPSIS AS INTRODUCED:
 
40 ILCS 5/1-110.18 new
30 ILCS 805/8.48 new

    Amends the General Provisions Article of the Illinois Pension Code. Provides that the amendatory Act may be referred to as the Fossil Fuel Divestment Act. With regard to the pension funds and retirement systems established under the General Assembly, Chicago Police, Chicago Firefighter, Illinois Municipal Retirement Fund (IMRF), Chicago Municipal, Chicago Laborers', State Employees, State Universities, Downstate Teachers, or Judges Article of the Code, prohibits investment of pension system assets in fossil fuel companies. Requires pension systems to adopt an update to its written investment policies if necessary. Requires pension systems to divest any holdings of stocks, securities, or other obligations of a fossil fuel company. Provides that, beginning one year after the effective date of the amendatory Act, the board of trustees of a pension system shall ensure that the pension system does not invest in any indirect investment vehicle unless the board of trustees is satisfied that the investment vehicle is unlikely to have more than 2% of its assets invested in coal, oil, or gas producers. Requires pension systems to post on its publicly accessible website information detailing all its holdings in the public market and private equity investments. Requires pension systems to annually issue a report reviewing its environmental, social, and governance investment policy. Sets forth definitions and other provisions. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.


LRB103 39032 RPS 69169 b

STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT
MAY APPLY

 

 

A BILL FOR

 

SB3717LRB103 39032 RPS 69169 b

1    AN ACT concerning public employee benefits.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. This Act may be referred to as the Fossil Fuel
5Divestment Act.
 
6    Section 5. Findings; purpose. The General Assembly finds
7that:
8        (1) Climate change is a real and serious threat to the
9    health, welfare, and prosperity of all Illinoisans, now
10    and in the future. Maintaining the status quo of fossil
11    fuel energy production could lead to catastrophic results.
12        (2) The threat of climate change and the necessary
13    transformation of the global energy system to mitigate it
14    will have a serious negative impact on investors whose
15    assets are not aligned with a 1.5-degree Celsius
16    trajectory.
17        (3) Continued investment in fossil fuel producers
18    poses unacceptable risk to the long-term sustainability of
19    the 5 Illinois State pension funds, the General Assembly
20    Retirement System (GARS), the State Employees' Retirement
21    System of Illinois (SERS), the State Universities
22    Retirement System (SURS), the Teachers' Retirement System
23    of the State of Illinois (TRS), and the Judges' Retirement

 

 

SB3717- 2 -LRB103 39032 RPS 69169 b

1    System of Illinois (JRS); the Illinois Municipal
2    Retirement Fund (IMRF); and the 4 Chicago pension funds,
3    the Municipal Employees', Officers', and Officials'
4    Annuity and Benefit Fund of Chicago (MEABF), the Laborers'
5    and Retirement Board Employees' Annuity and Benefit Fund
6    of Chicago (LABF), the Policemen's Annuity and Benefit
7    Fund of Chicago, and the Firemen's Annuity and Benefit
8    Fund of Chicago.
9        (4) Continued investment in fossil fuel producers
10    poses unacceptable risk to the long-term sustainability of
11    $26,000,000,000 of the State's investments;
12    $17,000,000,000 in the programs established pursuant to
13    Section 529 of the Internal Revenue Code; $12,000,000,000
14    of the Illinois Funds; $80,000,000 of the Secure Choice
15    Retirement Savings Program; and $30,000,000 in the ABLE
16    Account Program.
17        (5) Continued investment in fossil fuel producers
18    poses unacceptable risk to the long-term sustainability of
19    the City of Chicago's pension funds.
20        (6) Because the continued investment in fossil fuel
21    producers poses unacceptable risk to these pension systems
22    and State investments, those who hold investment authority
23    over these systems should divest from fossil fuel
24    companies and fossil fuel infrastructure.
 
25    Section 10. The Illinois Pension Code is amended by adding

 

 

SB3717- 3 -LRB103 39032 RPS 69169 b

1Section 1-110.18 as follows:
 
2    (40 ILCS 5/1-110.18 new)
3    Sec. 1-110.18. Fossil fuel investment prohibited.
4    (a) In this Section:
5    "Fossil fuel" means coal, petroleum, natural gas, or any
6derivative of coal, petroleum, or natural gas that is used for
7fuel.
8    "Fossil fuel company" means any company that: (1) is among
9the 200 publicly traded companies with the largest fossil fuel
10reserves in the world; (2) is among the 30 largest public
11company owners in the world of coal-fired power plants; (3)
12has as its core business the construction or operation of
13fossil fuel infrastructure; (4) has as its core business the
14exploration, extraction, refining, processing, or distribution
15of fossil fuels; or (5) that receives more than 20% of its
16gross revenue from companies that meet the definition under
17item (1), (2), (3), or (4) of this definition.
18    "Fossil fuel infrastructure" means oil or gas wells; oil
19or gas pipelines and refineries; oil, coal, or gas-fired power
20plants; oil and gas storage tanks; fossil fuel export
21terminals; and any other infrastructure used exclusively for
22fossil fuels.
23    "Indirect investment" means a holding in an investment
24vehicle that directly or indirectly owns a more than 1%
25interest in one or more individual fossil fuel companies.

 

 

SB3717- 4 -LRB103 39032 RPS 69169 b

1    "Pension system" means a pension fund or retirement system
2established under Article 2, 5, 6, 7, 8, 11, 14, 15, 16, or 18.
3    (b) A pension system, in accordance with sound investment
4criteria and consistent with fiduciary obligations, shall not
5invest the assets of the pension system in the stocks,
6securities, or other obligations of any fossil fuel company or
7any subsidiary, affiliate, or parent of any fossil fuel
8company. Nothing in this subsection precludes de minimis
9exposure of any funds held by a pension system to the stocks,
10securities, or other obligations of any fossil fuel company or
11any subsidiary, affiliate, or parent of any fossil fuel
12company. The board of trustees of a pension system shall not
13invest in any prime commercial paper or corporate bonds issued
14by a fossil fuel company.
15    (c) Each board of trustees of a pension system that has
16adopted a written investment policy under Section 1-113.6
17shall adopt an update of its written investment policies, if
18necessary, to meet the requirements of this Section and file a
19copy of that updated policy with the Department of Insurance
20within 30 days after its adoption.
21    (d) Beginning one year after the effective date of this
22amendatory Act of the 103rd General Assembly, subject to an
23affirmative determination of prudence, and in accordance with
24sound investment criteria and consistent with its fiduciary
25obligations, each board of trustees of a pension system shall
26ensure that the pension system does not invest in any indirect

 

 

SB3717- 5 -LRB103 39032 RPS 69169 b

1investment vehicle unless the board of trustees is satisfied
2that the investment vehicle is unlikely to have more than 2% of
3its assets invested in coal, oil, or gas producers.
4    (e) Each pension system shall review the extent to which
5the assets of the pension system are invested in the stocks,
6securities, or other obligations of any fossil fuel company or
7any subsidiary, affiliate, or parent of any fossil fuel
8company. The board of trustees of a pension system shall, in
9accordance with sound investment criteria and consistent with
10fiduciary obligations, divest any such holdings. Divestment
11pursuant to this subsection must be completed by January 1,
122029. Nothing in this subsection precludes de minimis exposure
13of any funds held by the board to the stocks, securities, or
14other obligations of any fossil fuel company or any
15subsidiary, affiliate, or parent of any fossil fuel company.
16    (f) The board of trustees of a pension system may not
17invest in any prime commercial paper or corporate bonds issued
18by a fossil fuel company.
19    (g) On a quarterly basis, each pension system shall post
20on its publicly accessible website information detailing all
21its holdings in the public market and private equity
22investments.
23    (h) Beginning January 1, 2025 and annually thereafter,
24each pension system shall issue a report reviewing its
25environmental, social, and governance investment policy. The
26report must disclose commonly available environmental

 

 

SB3717- 6 -LRB103 39032 RPS 69169 b

1performance metrics on the environmental effects of the
2pension system's investments.
 
3    Section 90. The State Mandates Act is amended by adding
4Section 8.48 as follows:
 
5    (30 ILCS 805/8.48 new)
6    Sec. 8.48. Exempt mandate. Notwithstanding Sections 6 and
78 of this Act, no reimbursement by the State is required for
8the implementation of any mandate created by this amendatory
9Act of the 103rd General Assembly.
 
10    Section 99. Effective date. This Act takes effect upon
11becoming law.