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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 |
|
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 |