Sen. Bill Cunningham

Filed: 3/22/2023

 

 


 

 


 
10300SB2152sam002LRB103 30754 RPS 59693 a

1
AMENDMENT TO SENATE BILL 2152

2    AMENDMENT NO. ______. Amend Senate Bill 2152 by replacing
3everything after the enacting clause with the following:
 
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, the
12State Treasurer, upon the request of the Board, shall manage
13the domestic and international proxy voting activity for
14shares held directly by the System and execute required
15ballots on behalf of the System. The State Treasurer shall
16provide the Board with comprehensive proxy voting reports on a

 

 

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1quarterly basis and as requested by the Board.
2    (c) The State Treasurer shall act as a fiduciary to the
3System with regard to all aspects of the State Treasurer's
4management of the proxy voting activity as provided under
5subsection (b).
6    (d) With respect to this Section, and with respect to the
7State Treasurer's management of the proxy voting activity as
8provided for under subsection (b), the Board is exempt from
9any conflicting statutory or common law obligations, including
10any fiduciary or co-fiduciary duties under this Article and
11Article 1.
12    (e) With respect to this Section and with respect to the
13State Treasurer's management of the proxy voting activity as
14provided for under subsection (b), the Board, its staff, and
15the trustees of the Board shall not be liable for any damage or
16suits where damages are sought for negligent or wrongful acts
17alleged to have been committed in connection with the
18management of proxy voting activity as provided for under this
19Section.
20    (f) All costs associated with the State Treasurer's
21management of proxy voting activity under subsection (b) shall
22be borne exclusively by the State Treasurer, including, but
23not limited to, any payments to a third-party service provider
24to provide proxy voting services.
25    (g) This Section is repealed on January 1, 2027.
 

 

 

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1    (40 ILCS 5/15-177.6 new)
2    Sec. 15-177.6. Fiduciary report. On or before January 1,
32025, and annually thereafter, the Board shall publish its
4guidelines for voting proxy ballots and a detailed report on
5its website describing how the Board is considering
6sustainability factors as defined in the Illinois Sustainable
7Investing 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, environmental 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    (40 ILCS 5/16-188 new)
25    Sec. 16-188. Proxy voting.

 

 

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1    (a) In this Section, "fiduciary" has the meaning given to
2that term in Section 1-101.2.
3    (b) Notwithstanding the Board's investment authority, the
4State Treasurer, upon the request of the Board, shall manage
5the domestic and international proxy voting activity for
6shares held directly by the System and execute required
7ballots on behalf of the System. The State Treasurer shall
8provide the Board with comprehensive proxy voting reports on a
9quarterly basis and as requested by the Board.
10    (c) The State Treasurer shall act as a fiduciary to the
11System with regard to all aspects of the State Treasurer's
12management of the proxy voting activity as provided under
13subsection (b).
14    (d) 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    (e) 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    (f) All costs associated with the State Treasurer's
3management of proxy voting activity under subsection (b) shall
4be borne exclusively by the State Treasurer, including, but
5not limited to, any payments to a third-party service provider
6to provide proxy voting services.
7    (g) This Section is repealed on January 1, 2027.
 
8    (40 ILCS 5/16-189 new)
9    Sec. 16-189. Fiduciary report. On or before January 1,
102025, and annually thereafter, the Board shall publish its
11guidelines for voting proxy ballots and a detailed report on
12its website describing how the Board is considering
13sustainability factors as defined in the Illinois Sustainable
14Investing Act. The report shall:
15        (1) describe the Board's strategy as it relates to the
16    consideration of sustainable investment factors;
17        (2) outline the process for regular assessment across
18    the total portfolio of potential effects from systemic and
19    regulatory risks and opportunities, including, but not
20    limited to, environmental factors on the assets of the
21    plan;
22        (3) disclose how each investment manager serving as a
23    fiduciary to the Board integrates sustainability factors
24    into the investment manager's investment decision-making
25    process;

 

 

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1        (4) provide a comprehensive proxy voting report;
2        (5) provide an overview of all corporate engagement
3    and stewardship activities; and
4        (6) include any other information the Board deems
5    necessary.
 
6    (40 ILCS 5/22A-106)  (from Ch. 108 1/2, par. 22A-106)
7    Sec. 22A-106. "Manage": To invest, reinvest, exchange and
8to perform all investment functions with regard to reserves,
9funds, assets, securities and moneys which the board is
10authorized to invest, and to preserve and protect such
11reserves, funds, assets, securities and moneys, including, but
12not limited to, authority to vote any stocks, bonds or other
13securities and to give general or special proxies or powers of
14attorney with or without power of substitution, except that
15the authority to vote proxies is subject to Section 22A-113.4.
16This term shall not include any functions, duties and
17responsibilities incident to the operation and administration
18of pension funds or education fund other than that of
19investments.
20(Source: P.A. 84-1127.)
 
21    (40 ILCS 5/22A-113.4 new)
22    Sec. 22A-113.4. Proxy voting.
23    (a) In this Section, "fiduciary" has the meaning given to
24that term in Section 1-101.2.

 

 

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1    (b) Notwithstanding the Board's investment authority, the
2State Treasurer, upon the request of the Board, shall manage
3the domestic and international proxy voting activity for
4shares held directly by the Board and execute required ballots
5on behalf of the Board. The State Treasurer shall provide the
6Board with comprehensive proxy voting reports on a quarterly
7basis and as requested.
8    (c) The State Treasurer shall act as a fiduciary to the
9Illinois State Board of Investment with regard to all aspects
10of the State Treasurer's management of the proxy voting
11activity as provided under subsection (b).
12    (d) With respect to this Section, and with respect to the
13State Treasurer's management of the proxy voting activity as
14provided for under subsection (b), the Board is exempt from
15any conflicting statutory or common law obligations, including
16any fiduciary or co-fiduciary duties under this Article and
17Article 1.
18    (e) With respect to this Section and with respect to the
19State Treasurer's management of the proxy voting activity as
20provided for under subsection (b), the Board, its staff, and
21the trustees of the Board shall not be liable for any damage or
22suits where damages are sought for negligent or wrongful acts
23alleged to have been committed in connection with the
24management of proxy voting activity as provided for under this
25Section.
26    (f) All costs associated with the State Treasurer's

 

 

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1management of proxy voting activity under subsection (b) shall
2be borne exclusively by the State Treasurer, including, but
3not limited to, any payments to a third-party service provider
4to provide proxy voting services.
5    (g) This Section is repealed on January 1, 2027.
 
6    (40 ILCS 5/22A-113.5 new)
7    Sec. 22A-113.5. Fiduciary report. On or before January 1,
82025, and annually thereafter, the Board shall publish its
9guidelines for voting proxy ballots and a detailed report on
10its website describing how the Board is considering
11sustainability factors as defined in the Illinois Sustainable
12Investing Act. The report shall:
13        (1) describe the Board's strategy as it relates to the
14    consideration of sustainable investment factors;
15        (2) outline the process for regular assessment across
16    the total portfolio of potential effects from systemic and
17    regulatory risks and opportunities, including, but not
18    limited to, environmental factors on the assets of the
19    plan;
20        (3) disclose how each investment manager serving as a
21    fiduciary to the Board integrates sustainability factors
22    into the investment manager's investment decision-making
23    process;
24        (4) provide a comprehensive proxy voting report;
25        (5) provide an overview of all corporate engagement

 

 

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1    and stewardship activities; and
2        (6) include any other information the Board deems
3    necessary.
 
4    Section 99. Effective date. This Act takes effect January
51, 2024.".