Sen. Bill Cunningham

Filed: 3/29/2023

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 2152

2    AMENDMENT NO. ______. Amend Senate Bill 2152, AS AMENDED,
3by replacing everything after the enacting clause with the
4following:
 
5    "Section 5. The Illinois Pension Code is amended by
6changing Section 22A-106 and by adding Sections 15-177.5,
715-177.6, 16-188, 16-189, 22A-113.4, and 22A-113.5 as follows:
 
8    (40 ILCS 5/15-177.5 new)
9    Sec. 15-177.5. Proxy voting.
10    (a) In this Section, "fiduciary" has the meaning given to
11that term in Section 1-101.2.
12    (b) Notwithstanding the Board's investment authority, and
13upon the affirmative vote of at least three-fifths of the
14members of the Board, the State Treasurer shall be authorized
15to manage the domestic and international proxy voting activity
16for shares held directly by the System and execute required

 

 

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1ballots on behalf of the System. The Board's consent granted
2under this Section may be revoked at any time upon the
3affirmative vote of a majority of the members of the Board.
4    (c) When the State Treasurer is managing any proxy voting
5activity in accordance with subsection (b), the following
6shall apply: (1) the State Treasurer shall provide the Board
7with (i) comprehensive proxy voting reports on a quarterly
8basis and as requested by the Board and (ii) access to
9communications with its third-party proxy voting service, if
10any, used in preparing the comprehensive proxy voting reports
11requested by the Board; and (2) the Board may provide the State
12Treasurer with guidance for proxy voting, which, if provided,
13the State Treasurer shall consider when voting.
14    (d) The State Treasurer shall act as a fiduciary to the
15System with regard to all aspects of the State Treasurer's
16management of the proxy voting activity as provided under
17subsection (b).
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 is exempt from
21any conflicting statutory or common law obligations, including
22any fiduciary or co-fiduciary duties under this Article and
23Article 1.
24    (f) With respect to this Section and with respect to the
25State Treasurer's management of the proxy voting activity as
26provided for under subsection (b), the Board, its staff, and

 

 

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1the trustees of the Board shall not be liable for any damage or
2suits where damages are sought for negligent or wrongful acts
3alleged to have been committed in connection with the
4management of proxy voting activity as provided for under this
5Section.
6    (g) In order to facilitate the State Treasurer's proxy
7voting activities under this Section and before the State
8Treasurer begins proxy voting activities, the State Treasurer
9and the Board shall enter into an intergovernmental agreement
10concerning costs, proxy voting guidance, reports and other
11documents, and other issues.
12    (h) This Section is repealed on January 1, 2027.
 
13    (40 ILCS 5/15-177.6 new)
14    Sec. 15-177.6. Fiduciary report. On or before September 1,
152023, and annually thereafter, the Board shall publish its
16guidelines for voting proxy ballots and a detailed report on
17its website describing how the Board is considering
18sustainability factors as defined in the Illinois Sustainable
19Investing Act. The report shall:
20        (1) describe the Board's strategy as it relates to the
21    consideration of sustainable investment factors;
22        (2) outline the process for regular assessment across
23    the total portfolio of potential effects from systemic and
24    regulatory risks and opportunities, including, but not
25    limited to, sustainability factors on the assets of the

 

 

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1    plan;
2        (3) disclose how each investment manager serving as a
3    fiduciary to the Board integrates sustainability factors
4    into the investment manager's investment decision-making
5    process;
6        (4) provide a comprehensive proxy voting report;
7        (5) provide an overview of all corporate engagement
8    and stewardship activities; and
9        (6) include any other information the Board deems
10    necessary.
 
11    (40 ILCS 5/16-188 new)
12    Sec. 16-188. Proxy voting.
13    (a) In this Section, "fiduciary" has the meaning given to
14that term in Section 1-101.2.
15    (b) Notwithstanding the Board's investment authority, and
16upon the affirmative vote of at least three-fifths of the
17members of the Board, the State Treasurer shall be authorized
18to manage the domestic and international proxy voting activity
19for shares held directly by the System and execute required
20ballots on behalf of the System. The Board's consent granted
21under this Section may be revoked at any time upon the
22affirmative vote of a majority of the members of the Board.
23    (c) When the State Treasurer is managing any proxy voting
24activity in accordance with subsection (b), the following
25shall apply: (1) the State Treasurer shall provide the Board

 

 

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1with (i) comprehensive proxy voting reports on a quarterly
2basis and as requested by the Board and (ii) access to
3communications with its third-party proxy voting service, if
4any, used in preparing the comprehensive proxy voting reports
5requested by the Board; and (2) the Board may provide the State
6Treasurer with guidance for proxy voting, which, if provided,
7the State Treasurer shall consider when voting.
8    (d) The State Treasurer shall act as a fiduciary to the
9System with regard to all aspects of the State Treasurer's
10management of the proxy voting activity as provided under
11subsection (b).
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 is exempt from
15any conflicting statutory or common law obligations, including
16any fiduciary or co-fiduciary duties under this Article and
17Article 1.
18    (f) 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    (g) In order to facilitate the State Treasurer's proxy

 

 

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1voting activities under this Section and before the State
2Treasurer begins proxy voting activities, the State Treasurer
3and the Board shall enter into an intergovernmental agreement
4concerning costs, proxy voting guidance, reports and other
5documents, and other issues.
6    (h) This Section is repealed on January 1, 2027.
 
7    (40 ILCS 5/16-189 new)
8    Sec. 16-189. Fiduciary report. On or before September 1,
92023, and annually thereafter, the Board shall publish its
10guidelines for voting proxy ballots and a detailed report on
11its website describing how the Board is considering
12sustainability factors as defined in the Illinois Sustainable
13Investing Act. The report shall:
14        (1) describe the Board's strategy as it relates to the
15    consideration of sustainable investment factors;
16        (2) outline the process for regular assessment across
17    the total portfolio of potential effects from systemic and
18    regulatory risks and opportunities, including, but not
19    limited to, sustainability factors on the assets of the
20    plan;
21        (3) disclose how each investment manager serving as a
22    fiduciary to the Board integrates sustainability factors
23    into the investment manager's investment decision-making
24    process;
25        (4) provide a comprehensive proxy voting report;

 

 

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

 

 

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1upon the affirmative vote of at least three-fifths of the
2members of the Board, the State Treasurer shall be authorized
3to manage the domestic and international proxy voting activity
4for shares held directly by the Board and execute required
5ballots on behalf of the Board. The Board's consent granted
6under this Section may be revoked at any time upon the
7affirmative vote of a majority of the members of the Board.
8    (c) When the State Treasurer is managing any proxy voting
9activity in accordance with subsection (b), the following
10shall apply: (1) the State Treasurer shall provide the Board
11with (i) comprehensive proxy voting reports on a quarterly
12basis and as requested by the Board and (ii) access to
13communications with its third-party proxy voting service, if
14any, used in preparing the comprehensive proxy voting reports
15requested by the Board; and (2) the Board may provide the State
16Treasurer with guidance for proxy voting, which, if provided,
17the State Treasurer shall consider when voting.
18    (d) The State Treasurer shall act as a fiduciary to the
19Illinois State Board of Investment with regard to all aspects
20of the State Treasurer's management of the proxy voting
21activity as provided under subsection (b).
22    (e) With respect to this Section, and with respect to the
23State Treasurer's management of the proxy voting activity as
24provided for under subsection (b), the Board is exempt from
25any conflicting statutory or common law obligations, including
26any fiduciary or co-fiduciary duties under this Article and

 

 

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1Article 1.
2    (f) With respect to this Section and with respect to the
3State Treasurer's management of the proxy voting activity as
4provided for under subsection (b), the Board, its staff, and
5the trustees of the Board shall not be liable for any damage or
6suits where damages are sought for negligent or wrongful acts
7alleged to have been committed in connection with the
8management of proxy voting activity as provided for under this
9Section.
10    (g) In order to facilitate the State Treasurer's proxy
11voting activities under this Section and before the State
12Treasurer begins proxy voting activities, the State Treasurer
13and the Board shall enter into an intergovernmental agreement
14concerning costs, proxy voting guidance, reports and other
15documents, and other issues.
16    (h) This Section is repealed on January 1, 2027.
 
17    (40 ILCS 5/22A-113.5 new)
18    Sec. 22A-113.5. Fiduciary report. On or before September
191, 2023, and annually thereafter, the Board shall publish its
20guidelines for voting proxy ballots and a detailed report on
21its website describing how the Board is considering
22sustainability factors as defined in the Illinois Sustainable
23Investing Act. The report shall:
24        (1) describe the Board's strategy as it relates to the
25    consideration of sustainable investment factors;

 

 

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1        (2) outline the process for regular assessment across
2    the total portfolio of potential effects from systemic and
3    regulatory risks and opportunities, including, but not
4    limited to, sustainability factors on the assets of the
5    plan;
6        (3) disclose how each investment manager serving as a
7    fiduciary to the Board integrates sustainability factors
8    into the investment manager's investment decision-making
9    process;
10        (4) provide a comprehensive proxy voting report;
11        (5) provide an overview of all corporate engagement
12    and stewardship activities; and
13        (6) include any other information the Board deems
14    necessary.
 
15    Section 99. Effective date. This Act takes effect upon
16becoming law.".