Bill Text: IL SB2429 | 2023-2024 | 103rd General Assembly | Introduced

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Bill Title: Amends the Illinois Sustainable Investing Act. Provides that, effective January 1, 2024, every investment manager shall comply with annual disclosure requirements that will require the investment manager to provide a description of the process through which the manager will 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, identify and minimize projected risk, and execute its fiduciary duties more effectively. Provides that the investment manager shall provide the annual disclosure to each public agency, pension fund, retirement system, or governmental unit for whom the investment manager is acting as a fiduciary or seeking selection as a fiduciary prior to acting in this capacity and at least annually thereafter. Provides that annual disclosures shall be submitted by January 31st of every year after the effective date of the amendatory Act. Defines "investment manager".

Spectrum: Partisan Bill (Democrat 3-0)

Status: (Introduced) 2023-06-26 - Senate Committee Amendment No. 1 Pursuant to Senate Rule 3-9(b) / Referred to Assignments [SB2429 Detail]

Download: Illinois-2023-SB2429-Introduced.html

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103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB2429 Introduced 2/10/2023, by Sen. Ram Villivalam SYNOPSIS AS INTRODUCED:
30 ILCS 238/10
30 ILCS 238/20
Amends the Illinois Sustainable Investing Act. Provides that, effective January 1, 2024, every investment manager shall comply with annual disclosure requirements that will require the investment manager to provide a description of the process through which the manager will 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, identify and minimize projected risk, and execute its fiduciary duties more effectively. Provides that the investment manager shall provide the annual disclosure to each public agency, pension fund, retirement system, or governmental unit for whom the investment manager is acting as a fiduciary or seeking selection as a fiduciary prior to acting in this capacity and at least annually thereafter. Provides that annual disclosures shall be submitted by January 31st of every year after the effective date of the amendatory Act. Defines "investment manager".
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A BILL FOR
SB2429 LRB103 30646 DTM 57104 b
AN ACT concerning finance.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Sustainable Investing Act is
amended by changing Sections 10 and 20 as follows:
(30 ILCS 238/10)
Sec. 10. Definitions. As used in this Act:
"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.
"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.
"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.
"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.
"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.
(Source: P.A. 101-473, eff. 1-1-20.)
(30 ILCS 238/20)
Sec. 20. Consideration of sustainable investment factors
in decision-making.
(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.
(b) Sustainability factors may include, but are not
limited to, the following:
(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.
(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.
(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.
(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.
(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.
(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.
(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.
(d) Effective January 1, 2024, every investment manager
shall comply with annual disclosure requirements, which shall
include, but shall not be limited to, a description of the
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 financial returns, identify and
minimize projected risk, and execute the manager's fiduciary
duties more effectively. The investment manager shall provide
the manager's annual disclosure to each public agency, pension
fund, retirement system, or governmental unit for whom the
investment manager is acting as a fiduciary or seeking
selection as a fiduciary before acting in this official
capacity and at least annually thereafter. Annual disclosures
shall be submitted by January 31st of every year after the
effective date of this amendatory Act of the 103rd General
Assembly.

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(Source: P.A. 101-473, eff. 1-1-20.)