Bill Title: Reinserts the provisions of the bill as amended by Senate Amendment No. 2 with the following changes. Provides that the State Treasurer, upon the affirmative vote of three-fifths of the Board (instead of upon the request of the Board), shall manage the domestic and international proxy voting activity for shares held directly by the System or Investment Board and execute required ballots on behalf of the System or Investment Board. Provides that the Board's consent may be revoked at any time upon the affirmative vote of a majority of the Board. Requires the State Treasurer to provide access to communications with its third-party proxy voting service, if any, used in preparing the comprehensive proxy voting reports requested by the Board. Authorizes the Board to provide the State Treasurer with guidance for proxy voting, which, if provided, the State Treasurer shall consider when voting. Provides that in order to facilitate the State Treasurer's proxy voting activities and before the State Treasurer begins proxy voting activities, the State Treasurer and the Board shall enter into an intergovernmental agreement concerning costs, proxy voting guidance, reports and other documents, and other issues. Removes language providing that all costs associated with the State Treasurer's management of proxy voting activity shall be borne exclusively by the State Treasurer. Provides that on or before September 1, 2023 (instead of January 1, 2025), and annually thereafter, the Board shall publish its guidelines for voting proxy ballots and a detailed report on its website describing how the Board is considering sustainability factors. Makes other changes. Effective immediately (instead of January 1, 2024).
Spectrum: Partisan Bill (Democrat 12-0)
Status: (Passed) 2023-08-07 - Public Act . . . . . . . . . 103-0468
[SB2152 Detail]Download: Illinois-2023-SB2152-Chaptered.html
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| Public Act 103-0468
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| SB2152 Enrolled | LRB103 30754 RPS 57236 b |
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AN ACT concerning public employee benefits.
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Be it enacted by the People of the State of Illinois,
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represented in the General Assembly:
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Section 5. The Illinois Pension Code is amended by |
changing Section 22A-106 and by adding Sections 15-177.5, |
15-177.6, 16-188, 16-189, 22A-113.4, and 22A-113.5 as follows:
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(40 ILCS 5/15-177.5 new) |
Sec. 15-177.5. Proxy voting. |
(a) In this Section, "fiduciary" has the meaning given to |
that term in Section 1-101.2. |
(b) Notwithstanding the Board's investment authority, and |
upon the affirmative vote of at least three-fifths of the |
members of the Board, the State Treasurer shall be authorized |
to manage the domestic and international proxy voting activity |
for shares held directly by the System and execute required |
ballots on behalf of the System. The Board's consent granted |
under this Section may be revoked at any time upon the |
affirmative vote of a majority of the members of the Board. |
(c) When the State Treasurer is managing any proxy voting |
activity in accordance with subsection (b), the following |
shall apply: (1) the State Treasurer shall provide the Board |
with (i) comprehensive proxy voting reports on a quarterly |
basis and as requested by the Board and (ii) access to |
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communications with its third-party proxy voting service, if |
any, used in preparing the comprehensive proxy voting reports |
requested by the Board; and (2) the Board may provide the State |
Treasurer with guidance for proxy voting, which, if provided, |
the State Treasurer shall consider when voting. |
(d) The State Treasurer shall act as a fiduciary to the |
System with regard to all aspects of the State Treasurer's |
management of the proxy voting activity as provided under |
subsection (b). |
(e) With respect to this Section, and with respect to the |
State Treasurer's management of the proxy voting activity as |
provided for under subsection (b), the Board is exempt from |
any conflicting statutory or common law obligations, including |
any fiduciary or co-fiduciary duties under this Article and |
Article 1. |
(f) With respect to this Section and with respect to the |
State Treasurer's management of the proxy voting activity as |
provided for under subsection (b), the Board, its staff, and |
the trustees of the Board shall not be liable for any damage or |
suits where damages are sought for negligent or wrongful acts |
alleged to have been committed in connection with the |
management of proxy voting activity as provided for under this |
Section. |
(g) In order to facilitate the State Treasurer's proxy |
voting activities under this Section and before the State |
Treasurer begins proxy voting activities, the State Treasurer |
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and the Board shall enter into an intergovernmental agreement |
concerning costs, proxy voting guidance, reports and other |
documents, and other issues. |
(h) This Section is repealed on January 1, 2027.
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(40 ILCS 5/15-177.6 new) |
Sec. 15-177.6. Fiduciary report. On or before September 1, |
2023, and annually thereafter, the Board shall publish its |
guidelines for voting proxy ballots and a detailed report on |
its website describing how the Board is considering |
sustainability factors as defined in the Illinois Sustainable |
Investing Act. The report shall: |
(1) describe the Board's strategy as it relates to the |
consideration of sustainable investment factors; |
(2) outline the process for regular assessment across |
the total portfolio of potential effects from systemic and |
regulatory risks and opportunities, including, but not |
limited to, sustainability factors on the assets of the |
plan; |
(3) disclose how each investment manager serving as a |
fiduciary to the Board integrates sustainability factors |
into the investment manager's investment decision-making |
process; |
(4) provide a comprehensive proxy voting report; |
(5) provide an overview of all corporate engagement |
and stewardship activities; and |
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(6) include any other information the Board deems |
necessary.
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(40 ILCS 5/16-188 new) |
Sec. 16-188. Proxy voting. |
(a) In this Section, "fiduciary" has the meaning given to |
that term in Section 1-101.2. |
(b) Notwithstanding the Board's investment authority, and |
upon the affirmative vote of at least three-fifths of the |
members of the Board, the State Treasurer shall be authorized |
to manage the domestic and international proxy voting activity |
for shares held directly by the System and execute required |
ballots on behalf of the System. The Board's consent granted |
under this Section may be revoked at any time upon the |
affirmative vote of a majority of the members of the Board. |
(c) When the State Treasurer is managing any proxy voting |
activity in accordance with subsection (b), the following |
shall apply: (1) the State Treasurer shall provide the Board |
with (i) comprehensive proxy voting reports on a quarterly |
basis and as requested by the Board and (ii) access to |
communications with its third-party proxy voting service, if |
any, used in preparing the comprehensive proxy voting reports |
requested by the Board; and (2) the Board may provide the State |
Treasurer with guidance for proxy voting, which, if provided, |
the State Treasurer shall consider when voting. |
(d) The State Treasurer shall act as a fiduciary to the |
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System with regard to all aspects of the State Treasurer's |
management of the proxy voting activity as provided under |
subsection (b). |
(e) With respect to this Section, and with respect to the |
State Treasurer's management of the proxy voting activity as |
provided for under subsection (b), the Board is exempt from |
any conflicting statutory or common law obligations, including |
any fiduciary or co-fiduciary duties under this Article and |
Article 1. |
(f) With respect to this Section and with respect to the |
State Treasurer's management of the proxy voting activity as |
provided for under subsection (b), the Board, its staff, and |
the trustees of the Board shall not be liable for any damage or |
suits where damages are sought for negligent or wrongful acts |
alleged to have been committed in connection with the |
management of proxy voting activity as provided for under this |
Section. |
(g) In order to facilitate the State Treasurer's proxy |
voting activities under this Section and before the State |
Treasurer begins proxy voting activities, the State Treasurer |
and the Board shall enter into an intergovernmental agreement |
concerning costs, proxy voting guidance, reports and other |
documents, and other issues. |
(h) This Section is repealed on January 1, 2027.
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(40 ILCS 5/16-189 new) |
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Sec. 16-189. Fiduciary report. On or before September 1, |
2023, and annually thereafter, the Board shall publish its |
guidelines for voting proxy ballots and a detailed report on |
its website describing how the Board is considering |
sustainability factors as defined in the Illinois Sustainable |
Investing Act. The report shall: |
(1) describe the Board's strategy as it relates to the |
consideration of sustainable investment factors; |
(2) outline the process for regular assessment across |
the total portfolio of potential effects from systemic and |
regulatory risks and opportunities, including, but not |
limited to, sustainability factors on the assets of the |
plan; |
(3) disclose how each investment manager serving as a |
fiduciary to the Board integrates sustainability factors |
into the investment manager's investment decision-making |
process; |
(4) provide a comprehensive proxy voting report; |
(5) provide an overview of all corporate engagement |
and stewardship activities; and |
(6) include any other information the Board deems |
necessary.
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(40 ILCS 5/22A-106) (from Ch. 108 1/2, par. 22A-106)
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Sec. 22A-106. "Manage": To invest, reinvest, exchange and |
to perform all investment
functions with regard to reserves, |
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funds, assets, securities and moneys
which the board is |
authorized to invest, and to preserve and protect such
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reserves, funds, assets, securities and moneys, including, but |
not limited
to, authority to vote any stocks, bonds or other |
securities and to give
general or special proxies or powers of |
attorney with or without power of
substitution, except that |
the authority to vote proxies is subject to
Section 22A-113.4. |
This term shall not include any functions, duties and
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responsibilities incident to the operation and administration |
of pension
funds or education fund other than that of |
investments.
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(Source: P.A. 84-1127.)
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(40 ILCS 5/22A-113.4 new) |
Sec. 22A-113.4. Proxy voting. |
(a) In this Section, "fiduciary" has the meaning given to |
that term in Section 1-101.2. |
(b) Notwithstanding the Board's investment authority, and |
upon the affirmative vote of at least three-fifths of the |
members of the Board, the State Treasurer shall be authorized |
to manage the domestic and international proxy voting activity |
for shares held directly by the Board and execute required |
ballots on behalf of the Board. The Board's consent granted |
under this Section may be revoked at any time upon the |
affirmative vote of a majority of the members of the Board. |
(c) When the State Treasurer is managing any proxy voting |
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activity in accordance with subsection (b), the following |
shall apply: (1) the State Treasurer shall provide the Board |
with (i) comprehensive proxy voting reports on a quarterly |
basis and as requested by the Board and (ii) access to |
communications with its third-party proxy voting service, if |
any, used in preparing the comprehensive proxy voting reports |
requested by the Board; and (2) the Board may provide the State |
Treasurer with guidance for proxy voting, which, if provided, |
the State Treasurer shall consider when voting. |
(d) The State Treasurer shall act as a fiduciary to the |
Illinois State Board of Investment with regard to all aspects |
of the State Treasurer's management of the proxy voting |
activity as provided under subsection (b). |
(e) With respect to this Section, and with respect to the |
State Treasurer's management of the proxy voting activity as |
provided for under subsection (b), the Board is exempt from |
any conflicting statutory or common law obligations, including |
any fiduciary or co-fiduciary duties under this Article and |
Article 1. |
(f) With respect to this Section and with respect to the |
State Treasurer's management of the proxy voting activity as |
provided for under subsection (b), the Board, its staff, and |
the trustees of the Board shall not be liable for any damage or |
suits where damages are sought for negligent or wrongful acts |
alleged to have been committed in connection with the |
management of proxy voting activity as provided for under this |
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Section. |
(g) In order to facilitate the State Treasurer's proxy |
voting activities under this Section and before the State |
Treasurer begins proxy voting activities, the State Treasurer |
and the Board shall enter into an intergovernmental agreement |
concerning costs, proxy voting guidance, reports and other |
documents, and other issues. |
(h) This Section is repealed on January 1, 2027.
|
(40 ILCS 5/22A-113.5 new) |
Sec. 22A-113.5. Fiduciary report. On or before September |
1, 2023, and annually thereafter, the Board shall publish its |
guidelines for voting proxy ballots and a detailed report on |
its website describing how the Board is considering |
sustainability factors as defined in the Illinois Sustainable |
Investing Act. The report shall: |
(1) describe the Board's strategy as it relates to the |
consideration of sustainable investment factors; |
(2) outline the process for regular assessment across |
the total portfolio of potential effects from systemic and |
regulatory risks and opportunities, including, but not |
limited to, sustainability factors on the assets of the |
plan; |
(3) disclose how each investment manager serving as a |
fiduciary to the Board integrates sustainability factors |
into the investment manager's investment decision-making |
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process; |
(4) provide a comprehensive proxy voting report; |
(5) provide an overview of all corporate engagement |
and stewardship activities; and |
(6) include any other information the Board deems |
necessary.
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Section 99. Effective date. This Act takes effect upon |
becoming law.
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