Public Act 103-0468
SB2152 EnrolledLRB103 30754 RPS 57236 b SB2152 Enrolled LRB103 30754 RPS 57236 b
SB2152 Enrolled LRB103 30754 RPS 57236 b
AN ACT concerning public employee benefits.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
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:
(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
SB2152 Enrolled LRB103 30754 RPS 57236 b
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
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 5/15-177.6 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
(6) include any other information the Board deems
necessary.
(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
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.
(40 ILCS 5/16-189 new)
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.
(40 ILCS 5/22A-106) (from Ch. 108 1/2, par. 22A-106)
Sec. 22A-106. "Manage": To invest, reinvest, exchange and
to perform all investment functions with regard to reserves,
funds, assets, securities and moneys which the board is
authorized to invest, and to preserve and protect such
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
responsibilities incident to the operation and administration
of pension funds or education fund other than that of
investments.
(Source: P.A. 84-1127.)
(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
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
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.
Section 99. Effective date. This Act takes effect upon
becoming law.