SB2152 EnrolledLRB103 30754 RPS 57236 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 5. The Illinois Pension Code is amended by
5changing Section 22A-106 and by adding Sections 15-177.5,
615-177.6, 16-188, 16-189, 22A-113.4, and 22A-113.5 as follows:
 
7    (40 ILCS 5/15-177.5 new)
8    Sec. 15-177.5. Proxy voting.
9    (a) In this Section, "fiduciary" has the meaning given to
10that term in Section 1-101.2.
11    (b) Notwithstanding the Board's investment authority, and
12upon the affirmative vote of at least three-fifths of the
13members of the Board, the State Treasurer shall be authorized
14to manage the domestic and international proxy voting activity
15for shares held directly by the System and execute required
16ballots on behalf of the System. The Board's consent granted
17under this Section may be revoked at any time upon the
18affirmative vote of a majority of the members of the Board.
19    (c) When the State Treasurer is managing any proxy voting
20activity in accordance with subsection (b), the following
21shall apply: (1) the State Treasurer shall provide the Board
22with (i) comprehensive proxy voting reports on a quarterly
23basis and as requested by the Board and (ii) access to

 

 

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1communications with its third-party proxy voting service, if
2any, used in preparing the comprehensive proxy voting reports
3requested by the Board; and (2) the Board may provide the State
4Treasurer with guidance for proxy voting, which, if provided,
5the State Treasurer shall consider when voting.
6    (d) The State Treasurer shall act as a fiduciary to the
7System with regard to all aspects of the State Treasurer's
8management of the proxy voting activity as provided under
9subsection (b).
10    (e) With respect to this Section, and with respect to the
11State Treasurer's management of the proxy voting activity as
12provided for under subsection (b), the Board is exempt from
13any conflicting statutory or common law obligations, including
14any fiduciary or co-fiduciary duties under this Article and
15Article 1.
16    (f) With respect to this Section and with respect to the
17State Treasurer's management of the proxy voting activity as
18provided for under subsection (b), the Board, its staff, and
19the trustees of the Board shall not be liable for any damage or
20suits where damages are sought for negligent or wrongful acts
21alleged to have been committed in connection with the
22management of proxy voting activity as provided for under this
23Section.
24    (g) In order to facilitate the State Treasurer's proxy
25voting activities under this Section and before the State
26Treasurer begins proxy voting activities, the State Treasurer

 

 

SB2152 Enrolled- 3 -LRB103 30754 RPS 57236 b

1and the Board shall enter into an intergovernmental agreement
2concerning costs, proxy voting guidance, reports and other
3documents, and other issues.
4    (h) This Section is repealed on January 1, 2027.
 
5    (40 ILCS 5/15-177.6 new)
6    Sec. 15-177.6. Fiduciary report. On or before September 1,
72023, and annually thereafter, the Board shall publish its
8guidelines for voting proxy ballots and a detailed report on
9its website describing how the Board is considering
10sustainability factors as defined in the Illinois Sustainable
11Investing Act. The report shall:
12        (1) describe the Board's strategy as it relates to the
13    consideration of sustainable investment factors;
14        (2) outline the process for regular assessment across
15    the total portfolio of potential effects from systemic and
16    regulatory risks and opportunities, including, but not
17    limited to, sustainability factors on the assets of the
18    plan;
19        (3) disclose how each investment manager serving as a
20    fiduciary to the Board integrates sustainability factors
21    into the investment manager's investment decision-making
22    process;
23        (4) provide a comprehensive proxy voting report;
24        (5) provide an overview of all corporate engagement
25    and stewardship activities; and

 

 

SB2152 Enrolled- 4 -LRB103 30754 RPS 57236 b

1        (6) include any other information the Board deems
2    necessary.
 
3    (40 ILCS 5/16-188 new)
4    Sec. 16-188. Proxy voting.
5    (a) In this Section, "fiduciary" has the meaning given to
6that term in Section 1-101.2.
7    (b) Notwithstanding the Board's investment authority, and
8upon the affirmative vote of at least three-fifths of the
9members of the Board, the State Treasurer shall be authorized
10to manage the domestic and international proxy voting activity
11for shares held directly by the System and execute required
12ballots on behalf of the System. The Board's consent granted
13under this Section may be revoked at any time upon the
14affirmative vote of a majority of the members of the Board.
15    (c) When the State Treasurer is managing any proxy voting
16activity in accordance with subsection (b), the following
17shall apply: (1) the State Treasurer shall provide the Board
18with (i) comprehensive proxy voting reports on a quarterly
19basis and as requested by the Board and (ii) access to
20communications with its third-party proxy voting service, if
21any, used in preparing the comprehensive proxy voting reports
22requested by the Board; and (2) the Board may provide the State
23Treasurer with guidance for proxy voting, which, if provided,
24the State Treasurer shall consider when voting.
25    (d) The State Treasurer shall act as a fiduciary to the

 

 

SB2152 Enrolled- 5 -LRB103 30754 RPS 57236 b

1System with regard to all aspects of the State Treasurer's
2management of the proxy voting activity as provided under
3subsection (b).
4    (e) With respect to this Section, and with respect to the
5State Treasurer's management of the proxy voting activity as
6provided for under subsection (b), the Board is exempt from
7any conflicting statutory or common law obligations, including
8any fiduciary or co-fiduciary duties under this Article and
9Article 1.
10    (f) With respect to this Section and with respect to the
11State Treasurer's management of the proxy voting activity as
12provided for under subsection (b), the Board, its staff, and
13the trustees of the Board shall not be liable for any damage or
14suits where damages are sought for negligent or wrongful acts
15alleged to have been committed in connection with the
16management of proxy voting activity as provided for under this
17Section.
18    (g) In order to facilitate the State Treasurer's proxy
19voting activities under this Section and before the State
20Treasurer begins proxy voting activities, the State Treasurer
21and the Board shall enter into an intergovernmental agreement
22concerning costs, proxy voting guidance, reports and other
23documents, and other issues.
24    (h) This Section is repealed on January 1, 2027.
 
25    (40 ILCS 5/16-189 new)

 

 

SB2152 Enrolled- 6 -LRB103 30754 RPS 57236 b

1    Sec. 16-189. Fiduciary report. On or before September 1,
22023, and annually thereafter, the Board shall publish its
3guidelines for voting proxy ballots and a detailed report on
4its website describing how the Board is considering
5sustainability factors as defined in the Illinois Sustainable
6Investing Act. The report shall:
7        (1) describe the Board's strategy as it relates to the
8    consideration of sustainable investment factors;
9        (2) outline the process for regular assessment across
10    the total portfolio of potential effects from systemic and
11    regulatory risks and opportunities, including, but not
12    limited to, sustainability factors on the assets of the
13    plan;
14        (3) disclose how each investment manager serving as a
15    fiduciary to the Board integrates sustainability factors
16    into the investment manager's investment decision-making
17    process;
18        (4) provide a comprehensive proxy voting report;
19        (5) provide an overview of all corporate engagement
20    and stewardship activities; and
21        (6) include any other information the Board deems
22    necessary.
 
23    (40 ILCS 5/22A-106)  (from Ch. 108 1/2, par. 22A-106)
24    Sec. 22A-106. "Manage": To invest, reinvest, exchange and
25to perform all investment functions with regard to reserves,

 

 

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1funds, assets, securities and moneys which the board is
2authorized to invest, and to preserve and protect such
3reserves, funds, assets, securities and moneys, including, but
4not limited to, authority to vote any stocks, bonds or other
5securities and to give general or special proxies or powers of
6attorney with or without power of substitution, except that
7the authority to vote proxies is subject to Section 22A-113.4.
8This term shall not include any functions, duties and
9responsibilities incident to the operation and administration
10of pension funds or education fund other than that of
11investments.
12(Source: P.A. 84-1127.)
 
13    (40 ILCS 5/22A-113.4 new)
14    Sec. 22A-113.4. Proxy voting.
15    (a) In this Section, "fiduciary" has the meaning given to
16that term in Section 1-101.2.
17    (b) Notwithstanding the Board's investment authority, and
18upon the affirmative vote of at least three-fifths of the
19members of the Board, the State Treasurer shall be authorized
20to manage the domestic and international proxy voting activity
21for shares held directly by the Board and execute required
22ballots on behalf of the Board. The Board's consent granted
23under this Section may be revoked at any time upon the
24affirmative vote of a majority of the members of the Board.
25    (c) When the State Treasurer is managing any proxy voting

 

 

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1activity in accordance with subsection (b), the following
2shall apply: (1) the State Treasurer shall provide the Board
3with (i) comprehensive proxy voting reports on a quarterly
4basis and as requested by the Board and (ii) access to
5communications with its third-party proxy voting service, if
6any, used in preparing the comprehensive proxy voting reports
7requested by the Board; and (2) the Board may provide the State
8Treasurer with guidance for proxy voting, which, if provided,
9the State Treasurer shall consider when voting.
10    (d) The State Treasurer shall act as a fiduciary to the
11Illinois State Board of Investment with regard to all aspects
12of the State Treasurer's management of the proxy voting
13activity as provided under subsection (b).
14    (e) With respect to this Section, and with respect to the
15State Treasurer's management of the proxy voting activity as
16provided for under subsection (b), the Board is exempt from
17any conflicting statutory or common law obligations, including
18any fiduciary or co-fiduciary duties under this Article and
19Article 1.
20    (f) With respect to this Section and with respect to the
21State Treasurer's management of the proxy voting activity as
22provided for under subsection (b), the Board, its staff, and
23the trustees of the Board shall not be liable for any damage or
24suits where damages are sought for negligent or wrongful acts
25alleged to have been committed in connection with the
26management of proxy voting activity as provided for under this

 

 

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1Section.
2    (g) In order to facilitate the State Treasurer's proxy
3voting activities under this Section and before the State
4Treasurer begins proxy voting activities, the State Treasurer
5and the Board shall enter into an intergovernmental agreement
6concerning costs, proxy voting guidance, reports and other
7documents, and other issues.
8    (h) This Section is repealed on January 1, 2027.
 
9    (40 ILCS 5/22A-113.5 new)
10    Sec. 22A-113.5. Fiduciary report. On or before September
111, 2023, and annually thereafter, the Board shall publish its
12guidelines for voting proxy ballots and a detailed report on
13its website describing how the Board is considering
14sustainability factors as defined in the Illinois Sustainable
15Investing Act. The report shall:
16        (1) describe the Board's strategy as it relates to the
17    consideration of sustainable investment factors;
18        (2) outline the process for regular assessment across
19    the total portfolio of potential effects from systemic and
20    regulatory risks and opportunities, including, but not
21    limited to, sustainability factors on the assets of the
22    plan;
23        (3) disclose how each investment manager serving as a
24    fiduciary to the Board integrates sustainability factors
25    into the investment manager's investment decision-making

 

 

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1    process;
2        (4) provide a comprehensive proxy voting report;
3        (5) provide an overview of all corporate engagement
4    and stewardship activities; and
5        (6) include any other information the Board deems
6    necessary.
 
7    Section 99. Effective date. This Act takes effect upon
8becoming law.