Full Text of HB2782 103rd General Assembly
HB2782enr 103RD GENERAL ASSEMBLY |
| | HB2782 Enrolled | | LRB103 30690 DTM 57161 b |
|
| 1 | | AN ACT concerning finance.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Illinois Sustainable Investing Act is | 5 | | amended by changing Sections 10 and 20 as follows: | 6 | | (30 ILCS 238/10)
| 7 | | Sec. 10. Definitions. As used in this Act:
| 8 | | "Financial institution" means a bank, savings bank, or | 9 | | credit union established under the laws of the State of | 10 | | Illinois, another state, or the United States of America. | 11 | | "Governmental unit" has the same meaning as in the Local | 12 | | Government Debt Reform Act.
| 13 | | "Investment manager" means: | 14 | | (1) a fiduciary selected by a public agency, pension | 15 | | fund, retirement system or governmental unit who has the | 16 | | power to manage, acquire, or dispose of any asset of a | 17 | | public agency, pension fund, retirement system or | 18 | | governmental unit; | 19 | | (2) has acknowledged in writing that he or she is a | 20 | | fiduciary with respect to the public fund, retirement | 21 | | system or pension fund; and | 22 | | (3) is at least one of the following: (i) registered | 23 | | as an investment adviser under the federal Investment |
| | | HB2782 Enrolled | - 2 - | LRB103 30690 DTM 57161 b |
|
| 1 | | Advisers Act of 1940; (ii) registered as an investment | 2 | | adviser under the Illinois Securities Law of 1953; (iii) a | 3 | | bank, as defined in the Investment Advisers Act of 1940; | 4 | | or (iv) an insurance company authorized to transact | 5 | | business in this State. | 6 | | "Investment policy" means a written investment policy | 7 | | adopted by a public agency or governmental unit which | 8 | | addresses safety of principal, liquidity of funds, and return | 9 | | on investment and which requires the investment portfolio be | 10 | | structured in such a manner as to provide sufficient liquidity | 11 | | to pay obligations as they come due.
| 12 | | "Public agency" means the State of Illinois, the various | 13 | | counties, townships, cities, towns, villages, school | 14 | | districts, educational service regions, special road | 15 | | districts, public water supply districts, fire protection | 16 | | districts, drainage districts, levee districts, sewer | 17 | | districts, housing authorities, the Illinois Bank Examiners' | 18 | | Education Foundation, the Chicago Park District, and all other | 19 | | political corporations or subdivisions of the State of | 20 | | Illinois, now or hereafter created, whether herein | 21 | | specifically mentioned or not.
| 22 | | "Public funds" means current operating funds, special | 23 | | funds, interest and sinking funds, and funds of any kind or | 24 | | character belonging to or in the custody of any public agency.
| 25 | | "Sustainability factors" means factors that may have a | 26 | | material and relevant financial impact on the safety or |
| | | HB2782 Enrolled | - 3 - | LRB103 30690 DTM 57161 b |
|
| 1 | | performance of an investment and which are complementary to | 2 | | financial factors and financial accounting.
| 3 | | (Source: P.A. 101-473, eff. 1-1-20 .) | 4 | | (30 ILCS 238/20)
| 5 | | Sec. 20. Consideration of sustainable investment factors | 6 | | in decision-making.
| 7 | | (a) A public agency shall prudently integrate | 8 | | sustainability factors into its investment decision-making, | 9 | | investment analysis, portfolio construction, due diligence, | 10 | | and investment ownership in order to maximize anticipated | 11 | | financial returns, minimize projected risk, and more | 12 | | effectively execute its fiduciary duty.
| 13 | | (b) Sustainability factors may include, but are not | 14 | | limited to, the following:
| 15 | | (1) Corporate governance and leadership factors, such | 16 | | as the independence of boards and auditors, the expertise | 17 | | and competence of corporate boards and executives, | 18 | | systemic risk management practices, executive compensation | 19 | | structures, transparency and reporting, leadership | 20 | | diversity, regulatory and legal compliance, shareholder | 21 | | rights, and ethical conduct.
| 22 | | (2) Environmental factors that may have an adverse or | 23 | | positive financial impact on investment performance, such | 24 | | as greenhouse gas emissions, air quality, energy | 25 | | management, water and wastewater management, waste and |
| | | HB2782 Enrolled | - 4 - | LRB103 30690 DTM 57161 b |
|
| 1 | | hazardous materials management, and ecological impacts.
| 2 | | (3) Social capital factors that impact relationships | 3 | | with key outside parties, such as customers, local | 4 | | communities, the public, and the government, which may | 5 | | impact investment performance. Social capital factors | 6 | | include human rights, customer welfare, customer privacy, | 7 | | data security, access and affordability, selling practices | 8 | | and product labeling, community reinvestment, and | 9 | | community relations.
| 10 | | (4) Human capital factors that recognize that the | 11 | | workforce is an important asset to delivering long-term | 12 | | value, including factors such as labor practices, | 13 | | responsible contractor and responsible bidder policies, | 14 | | employee health and safety, employee engagement, diversity | 15 | | and inclusion, and incentives and compensation.
| 16 | | (5) Business model and innovation factors that reflect | 17 | | an ability to plan and forecast opportunities and risks, | 18 | | and whether a company can create long-term shareholder | 19 | | value, including factors such as supply chain management, | 20 | | materials sourcing and efficiency, business model | 21 | | resilience, product design and life cycle management, and | 22 | | physical impacts of climate change.
| 23 | | (c) Sustainability factors may be analyzed in a variety of | 24 | | ways, including, but not limited to: (1) direct financial | 25 | | impacts and risks; (2) legal, regulatory, and policy impacts | 26 | | and risks; (3) against industry norms, best practices, and |
| | | HB2782 Enrolled | - 5 - | LRB103 30690 DTM 57161 b |
|
| 1 | | competitive drivers; and (4) stakeholder engagement.
| 2 | | (d) Nothing in this Act prohibits a public agency or | 3 | | governmental unit from integrating additional factors into its | 4 | | investment decision-making, investment analysis, portfolio | 5 | | construction, due diligence, and investment ownership of | 6 | | public funds. This Act shall not apply to financial | 7 | | institution time deposits or financial institution processing | 8 | | services.
| 9 | | (e) Beginning January 1, 2024, investment managers shall | 10 | | disclose, prior to the award of a contract, a description of | 11 | | any process through which the manager prudently integrates the | 12 | | sustainability factors described in subsection (b) into their | 13 | | investment decision-making, investment analysis, portfolio | 14 | | construction, due diligence, and investment ownership in order | 15 | | to maximize anticipated risk-adjusted financial returns, | 16 | | identify projected risk, and execute the manager's fiduciary | 17 | | duties. Investment managers shall provide this disclosure to | 18 | | each public agency, pension fund, retirement system, or | 19 | | governmental unit for whom the investment manager is seeking | 20 | | selection as a fiduciary before acting in this official | 21 | | capacity. | 22 | | (Source: P.A. 101-473, eff. 1-1-20 .)
|
|