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| Public Act 103-0324
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| HB2782 Enrolled | LRB103 30690 DTM 57161 b |
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AN ACT concerning finance.
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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 Sustainable Investing Act is |
amended by changing Sections 10 and 20 as follows:
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(30 ILCS 238/10)
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Sec. 10. Definitions. As used in this Act:
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"Financial institution" means a bank, savings bank, or |
credit union established under the laws of the State of |
Illinois, another state, or the United States of America. |
"Governmental unit" has the same meaning as in the Local |
Government Debt Reform Act.
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"Investment manager" means: |
(1) a fiduciary selected by a public agency, pension |
fund, retirement system or governmental unit who has the |
power to manage, acquire, or dispose of any asset of a |
public agency, pension fund, retirement system or |
governmental unit; |
(2) has acknowledged in writing that he or she is a |
fiduciary with respect to the public fund, retirement |
system or pension fund; and |
(3) is at least one of the following: (i) registered |
as an investment adviser under the federal Investment |
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Advisers Act of 1940; (ii) registered as an investment |
adviser under the Illinois Securities Law of 1953; (iii) a |
bank, as defined in the Investment Advisers Act of 1940; |
or (iv) an insurance company authorized to transact |
business in this State. |
"Investment policy" means a written investment policy |
adopted by a public agency or governmental unit which |
addresses safety of principal, liquidity of funds, and return |
on investment and which requires the investment portfolio be |
structured in such a manner as to provide sufficient liquidity |
to pay obligations as they come due.
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"Public agency" means the State of Illinois, the various |
counties, townships, cities, towns, villages, school |
districts, educational service regions, special road |
districts, public water supply districts, fire protection |
districts, drainage districts, levee districts, sewer |
districts, housing authorities, the Illinois Bank Examiners' |
Education Foundation, the Chicago Park District, and all other |
political corporations or subdivisions of the State of |
Illinois, now or hereafter created, whether herein |
specifically mentioned or not.
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"Public funds" means current operating funds, special |
funds, interest and sinking funds, and funds of any kind or |
character belonging to or in the custody of any public agency.
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"Sustainability factors" means factors that may have a |
material and relevant financial impact on the safety or |
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performance of an investment and which are complementary to |
financial factors and financial accounting.
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(Source: P.A. 101-473, eff. 1-1-20.)
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(30 ILCS 238/20)
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Sec. 20. Consideration of sustainable investment factors |
in decision-making.
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(a) A public agency shall prudently integrate |
sustainability factors into its investment decision-making, |
investment analysis, portfolio construction, due diligence, |
and investment ownership in order to maximize anticipated |
financial returns, minimize projected risk, and more |
effectively execute its fiduciary duty.
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(b) Sustainability factors may include, but are not |
limited to, the following:
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(1) Corporate governance and leadership factors, such |
as the independence of boards and auditors, the expertise |
and competence of corporate boards and executives, |
systemic risk management practices, executive compensation |
structures, transparency and reporting, leadership |
diversity, regulatory and legal compliance, shareholder |
rights, and ethical conduct.
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(2) Environmental factors that may have an adverse or |
positive financial impact on investment performance, such |
as greenhouse gas emissions, air quality, energy |
management, water and wastewater management, waste and |
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hazardous materials management, and ecological impacts.
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(3) Social capital factors that impact relationships |
with key outside parties, such as customers, local |
communities, the public, and the government, which may |
impact investment performance. Social capital factors |
include human rights, customer welfare, customer privacy, |
data security, access and affordability, selling practices |
and product labeling, community reinvestment, and |
community relations.
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(4) Human capital factors that recognize that the |
workforce is an important asset to delivering long-term |
value, including factors such as labor practices, |
responsible contractor and responsible bidder policies, |
employee health and safety, employee engagement, diversity |
and inclusion, and incentives and compensation.
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(5) Business model and innovation factors that reflect |
an ability to plan and forecast opportunities and risks, |
and whether a company can create long-term shareholder |
value, including factors such as supply chain management, |
materials sourcing and efficiency, business model |
resilience, product design and life cycle management, and |
physical impacts of climate change.
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(c) Sustainability factors may be analyzed in a variety of |
ways, including, but not limited to: (1) direct financial |
impacts and risks; (2) legal, regulatory, and policy impacts |
and risks; (3) against industry norms, best practices, and |
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competitive drivers; and (4) stakeholder engagement.
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(d) Nothing in this Act prohibits a public agency or |
governmental unit from integrating additional factors into its |
investment decision-making, investment analysis, portfolio |
construction, due diligence, and investment ownership of |
public funds. This Act shall not apply to financial |
institution time deposits or financial institution processing |
services.
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(e) Beginning January 1, 2024, investment managers shall |
disclose, prior to the award of a contract, a description of |
any process through which the manager prudently integrates the |
sustainability factors described in subsection (b) into their |
investment decision-making, investment analysis, portfolio |
construction, due diligence, and investment ownership in order |
to maximize anticipated risk-adjusted financial returns, |
identify projected risk, and execute the manager's fiduciary |
duties. Investment managers shall provide this disclosure to |
each public agency, pension fund, retirement system, or |
governmental unit for whom the investment manager is seeking |
selection as a fiduciary before acting in this official |
capacity. |
(Source: P.A. 101-473, eff. 1-1-20.)
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