Indiana 2023 Regular Session

Indiana House Bill HB1008 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
	1	+	EH1008.2
	2	+	Reprinted
	3	+	April 12, 2023
	4	+	ENGROSSED
	5	+	HOUSE BILL No. 1008
	6	+	_____
	7	+	DIGEST OF HB 1008 (Updated April 11, 2023 3:49 pm - DI 141)
	8	+	Citations Affected: IC 5-10.2; IC 5-10.5; IC 34-30.
	9	+	Synopsis: Pension investments. Specifies certain entities, actions
	10	+	taken, or factors considered to which the ESG commitment provisions
	11	+	do not apply. Provides that if the treasurer of state concludes that the
	12	+	service provider has made an ESG commitment, the treasurer of state
	13	+	(Continued next page)
	14	+	Effective: July 1, 2023.
	15	+	Manning, Speedy, Lindauer, Soliday, Prescott,
	16	+	Abbott, McGuire, Morris, Lehman, May,
	17	+	Teshka, Bartels, Judy, Greene, Lauer, Goodrich,
	18	+	Mayfield, Snow, Davis, Morrison, Borders,
	19	+	Behning, Haggard, Culp, Lucas, Sweet, Frye R,
	20	+	Aylesworth, Ledbetter, Payne, Engleman,
	21	+	Heaton, Cherry, Jordan, Patterson, Vermilion,
	22	+	Barrett, DeVon, Criswell, Steuerwald, King,
	23	+	Miller D, Pressel, Cash, Jeter, Heine, Wesco,
	24	+	Hostettler
	25	+	(SENATE SPONSORS — HOLDMAN, KOCH, BUSCH, ROGERS, CRANE)
	26	+	January 12, 2023, read first time and referred to Committee on Financial Institutions.
	27	+	February 2, 2023, amended, reported — Do Pass. Referred to Committee on Ways and
	28	+	Means pursuant to Rule 127.
	29	+	February 21, 2023, amended, reported — Do Pass.
	30	+	February 23, 2023, read second time, ordered engrossed.
	31	+	February 24, 2023, engrossed.
	32	+	February 27, 2023, read third time, passed. Yeas 66, nays 33.
	33	+	SENATE ACTION
	34	+	March 1, 2023, read first time and referred to Committee on Pensions and Labor.
	35	+	April 6, 2023, amended, reported favorably — Do Pass.
	36	+	April 11, 2023, read second time, amended, ordered engrossed.
	37	+	EH 1008—LS 6994/DI 141 Digest Continued
	38	+	shall provide the name of the service provider and research supporting
	39	+	the conclusion to the board of trustees of the Indiana public retirement
	40	+	system (board). Prohibits the board from making an investment
	41	+	decision with the purpose of influencing any social or environmental
	42	+	policy or attempting to influence the governance of any corporation for
	43	+	nonfinancial purposes. Prohibits the Indiana public retirement system
	44	+	(system) from making an ESG commitment with respect to system
	45	+	assets. Provides that in making and supervising investments of the
	46	+	system, the board shall discharge its duties solely in the financial
	47	+	interest of the participants and beneficiaries of the system for the
	48	+	exclusive purposes of providing financial benefits to participants and
	49	+	beneficiaries and defraying reasonable expenses of administering the
	50	+	system. Provides that the board, in accordance with certain fiduciary
	51	+	duties, shall make investment decisions with the primary purpose of
	52	+	maximizing the target rate of return on the board's investments.
	53	+	Prohibits the board from entering a contract or modifying, amending,
	54	+	or continuing a contract with a service provider that has made an ESG
	55	+	commitment unless taking the action violates the board's fiduciary duty
	56	+	to the system's participants and beneficiaries. Requires the board to
	57	+	continue contracting with a service provider that has made an ESG
	58	+	commitment if the board determines that there is not a comparable
	59	+	service provider to replace the service provider. Requires the board to,
	60	+	at least annually, tabulate and report all proxy votes made by a service
	61	+	provider that is not a private market fund in relation to the
	62	+	administration of the system. Specifies certain persons and entities that
	63	+	are immune from civil liability and entitled to indemnification.
	64	+	Requires the board to: (1) ensure that reasonable efforts are made
	65	+	during the due diligence process before an investment is made and in
	66	+	monitoring investments in the public employees' defined contribution
	67	+	plan, an annuity savings account for the public employees' retirement
	68	+	fund or the Indiana state teachers' retirement fund, the teachers' defined
	69	+	contribution plan, the legislators' defined contribution plan, and a
	70	+	private market fund to determine whether any investments would
	71	+	violate the requirement that the board discharge its duties solely in the
	72	+	financial interest of the participants and beneficiaries of the system;
	73	+	and (2) take appropriate action, if necessary, consistent with the board's
	74	+	fiduciary duties. Defines terms and makes conforming amendments.
	75	+	EH 1008—LS 6994/DI 141EH 1008—LS 6994/DI 141 Reprinted
	76	+	April 12, 2023
1	77		First Regular Session of the 123rd General Assembly (2023)
2	78		PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
3	79		Constitution) is being amended, the text of the existing provision will appear in this style type,
4	80		additions will appear in this style type, and deletions will appear in this style type.
5	81		Additions: Whenever a new statutory provision is being enacted (or a new constitutional
6	82		provision adopted), the text of the new provision will appear in this style type. Also, the
7	83		word NEW will appear in that style type in the introductory clause of each SECTION that adds
8	84		a new provision to the Indiana Code or the Indiana Constitution.
9	85		Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
10	86		between statutes enacted by the 2022 Regular Session of the General Assembly.
11		-	HOUSE ENROLLED ACT No. 1008
12		-	AN ACT to amend the Indiana Code concerning pensions.
	87	+	ENGROSSED
	88	+	HOUSE BILL No. 1008
	89	+	A BILL FOR AN ACT to amend the Indiana Code concerning
	90	+	pensions.
13	91		Be it enacted by the General Assembly of the State of Indiana:
14		-	SECTION 1. IC 5-10.2-14 IS ADDED TO THE INDIANA CODE
	92	+	1 SECTION 1. IC 5-10.2-14 IS ADDED TO THE INDIANA CODE
	93	+	2 AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
	94	+	3 JULY 1, 2023]:
	95	+	4 Chapter 14. ESG Commitment
	96	+	5 Sec. 1. This chapter does not apply to:
	97	+	6 (1) a bank holding company (as defined in IC 28-2-16-3 or
	98	+	7 IC 28-2-16-9);
	99	+	8 (2) a subsidiary of a bank holding company (as defined in
	100	+	9 IC 28-2-16-3 or IC 28-2-16-9); or
	101	+	10 (3) an action taken or a factor considered pursuant to the
	102	+	11 requirements of this chapter by a trustee for a:
	103	+	12 (A) bank holding company described in subdivision (1); or
	104	+	13 (B) subsidiary of a bank holding company described in
	105	+	14 subdivision (2).
	106	+	15 Sec. 2. (a) As used in this chapter, "ESG commitment" means
	107	+	16 an action taken or a factor considered by a service provider:
	108	+	17 (1) with respect to or including the system's assets; and
	109	+	EH 1008—LS 6994/DI 141 2
	110	+	1 (2) with the nonfinancial purpose to further social, political,
	111	+	2 or ideological interests based on evidence indicating the
	112	+	3 purpose.
	113	+	4 (b) The term defined in subsection (a) includes a commitment to
	114	+	5 further, through portfolio company engagement or board or
	115	+	6 shareholder votes, any of the following for nonfinancial purposes
	116	+	7 beyond the applicable law requirements:
	117	+	8 (1) Eliminating, reducing, offsetting, or disclosing greenhouse
	118	+	9 gas emissions.
	119	+	10 (2) Instituting or assessing:
	120	+	11 (A) corporate board;
	121	+	12 (B) employment;
	122	+	13 (C) composition;
	123	+	14 (D) compensation; or
	124	+	15 (E) disclosure;
	125	+	16 criteria that incorporate characteristics protected under
	126	+	17 IC 22-9.
	127	+	18 (3) Divesting from, limiting investment in, or limiting the
	128	+	19 activities or investments of a company that does any of the
	129	+	20 following:
	130	+	21 (A) Fails to meet or does not commit to environmental
	131	+	22 standards or disclosures.
	132	+	23 (B) Engages in, facilitates, or supports the manufacture,
	133	+	24 import, distribution, marketing or advertising, sale, or
	134	+	25 lawful use of firearms, ammunition, or component parts
	135	+	26 and accessories of firearms or ammunition.
	136	+	27 (C) Contracts with the United States Immigration and
	137	+	28 Customs Enforcement for the provision of federal
	138	+	29 immigration detention centers or support services related
	139	+	30 to the implementation of federal immigration and border
	140	+	31 security laws, regulations, and policies.
	141	+	32 (D) Engages in the exploration, production, utilization,
	142	+	33 transportation, sale, or manufacturing of fossil fuel based
	143	+	34 energy, timber, mining, agriculture, and food animal
	144	+	35 production.
	145	+	36 Sec. 3. (a) As used in this chapter, "financial" means a prudent
	146	+	37 determination by a fiduciary to have a material effect on the
	147	+	38 monetary risk or the monetary return of an investment.
	148	+	39 (b) The term does not include an action taken or a factor
	149	+	40 considered by a fiduciary with the nonfinancial purpose to further
	150	+	41 social, political, or ideological interests as set forth in section 2 of
	151	+	42 this chapter.
	152	+	EH 1008—LS 6994/DI 141 3
	153	+	1 Sec. 4. As used in this chapter, "service provider" means
	154	+	2 investment managers and proxy advisors to the system.
	155	+	3 Sec. 5. (a) As used in this chapter and except as provided in
	156	+	4 subsection (b), "system" refers to the Indiana public retirement
	157	+	5 system established by IC 5-10.5-2-1.
	158	+	6 (b) The term does not include the following:
	159	+	7 (1) The public employees' defined contribution plan
	160	+	8 established under IC 5-10.3-12.
	161	+	9 (2) An annuity savings account for the public employees'
	162	+	10 retirement fund established under IC 5-10.2-2-2(a)(1).
	163	+	11 (3) The teachers' defined contribution plan established under
	164	+	12 IC 5-10.4-8.
	165	+	13 (4) An annuity savings account for the Indiana state teachers'
	166	+	14 retirement fund established under IC 5-10.2-2-2(c)(1).
	167	+	15 (5) The legislators' defined contribution plan established
	168	+	16 under IC 2-3.5-5.
	169	+	17 Sec. 6. Factors to be considered as evidence of a service
	170	+	18 provider's ESG commitment may include one (1) or more of the
	171	+	19 following:
	172	+	20 (1) Advertising.
	173	+	21 (2) Statements.
	174	+	22 (3) Explanations.
	175	+	23 (4) Reports.
	176	+	24 (5) Letters to clients.
	177	+	25 (6) Communications with portfolio companies.
	178	+	26 (7) Statements of principles.
	179	+	27 (8) Participation in, affiliation with, or status as a signatory
	180	+	28 to:
	181	+	29 (A) a coalition;
	182	+	30 (B) an initiative;
	183	+	31 (C) a joint statement of principles; or
	184	+	32 (D) an agreement.
	185	+	33 Sec. 7. If the treasurer of state has reasonable cause to believe
	186	+	34 that a service provider has made an ESG commitment, the
	187	+	35 treasurer of state shall research the matter and make a
	188	+	36 determination as to whether the service provider has made an ESG
	189	+	37 commitment. In conducting this research, the treasurer of state
	190	+	38 shall attempt to consult with the service provider and consider any
	191	+	39 information the service provider provides to the treasurer of state.
	192	+	40 If the treasurer of state concludes that the service provider has
	193	+	41 made an ESG commitment, the treasurer of state shall provide the:
	194	+	42 (1) name of the service provider; and
	195	+	EH 1008—LS 6994/DI 141 4
	196	+	1 (2) research supporting the conclusion;
	197	+	2 to the board.
	198	+	3 Sec. 8. (a) Except as otherwise provided by law, the board may
	199	+	4 not make an investment decision with the purpose of:
	200	+	5 (1) influencing any social or environmental policy; or
	201	+	6 (2) attempting to influence the governance of any corporation
	202	+	7 for nonfinancial purposes.
	203	+	8 (b) Except as otherwise provided by law, the system is
	204	+	9 prohibited from making an ESG commitment with respect to
	205	+	10 system assets, including without limitation in the selection of
	206	+	11 investments, selection of investment managers, management or
	207	+	12 oversight of investments, proxy voting, or shareholder engagement.
	208	+	13 Sec. 9. (a) In making and supervising investments of the system,
	209	+	14 the board shall discharge its duties solely in the financial interest
	210	+	15 of the participants and beneficiaries of the system for the exclusive
	211	+	16 purposes of:
	212	+	17 (1) providing financial benefits to participants and
	213	+	18 beneficiaries; and
	214	+	19 (2) defraying reasonable expenses of administering the
	215	+	20 system.
	216	+	21 (b) The board, in accordance with the fiduciary duties described
	217	+	22 in this article, shall make investment decisions with the primary
	218	+	23 purpose of maximizing the target rate of return on the board's
	219	+	24 investments.
	220	+	25 Sec. 10. (a) In accordance with the board's duty under section
	221	+	26 9 of this chapter, and except as provided in subsection (c), the
	222	+	27 board shall not:
	223	+	28 (1) enter a contract; or
	224	+	29 (2) modify, amend, or continue a contract;
	225	+	30 with a service provider that has made an ESG commitment unless
	226	+	31 taking the action described in subdivisions (1) and (2) violates the
	227	+	32 board's fiduciary duty to the system's participants and
	228	+	33 beneficiaries.
	229	+	34 (b) The board shall replace a service provider that has made an
	230	+	35 ESG commitment with a service provider that is comparable in
	231	+	36 financial performance, so as not to violate the board's fiduciary
	232	+	37 duty to the system's participants and beneficiaries. If the board
	233	+	38 replaces a service provider, it shall do so within a reasonable time,
	234	+	39 but not later than one hundred eighty (180) days after receiving
	235	+	40 notice from the treasurer of state of the service provider's ESG
	236	+	41 commitment.
	237	+	42 (c) If the board determines that there is not a comparable
	238	+	EH 1008—LS 6994/DI 141 5
	239	+	1 service provider to replace a service provider under subsection (b),
	240	+	2 the board shall continue contracting with the service provider that
	241	+	3 has made an ESG commitment. The board shall include in its
	242	+	4 minutes the:
	243	+	5 (1) decision that a comparable service provider does not exist;
	244	+	6 and
	245	+	7 (2) evidence supporting the decision under subdivision (1).
	246	+	8 Sec. 11. The board shall, at least annually, tabulate and report
	247	+	9 all proxy votes made by a service provider that is not a private
	248	+	10 market fund (as defined in IC 5-10.2-10-11) in relation to the
	249	+	11 administration of the system. For each vote reported, the report
	250	+	12 must contain:
	251	+	13 (1) a vote caption;
	252	+	14 (2) the fund's vote;
	253	+	15 (3) the recommendation of the portfolio company's
	254	+	16 management; and
	255	+	17 (4) if applicable, the recommendation of a proxy advisor or
	256	+	18 other service provider.
	257	+	19 Sec. 12. (a) The following are immune from civil liability for any
	258	+	20 act or omission related to any action under this chapter:
	259	+	21 (1) The state.
	260	+	22 (2) Officers, agents, and employees of the state.
	261	+	23 (3) The system.
	262	+	24 (4) The:
	263	+	25 (A) board members;
	264	+	26 (B) executive director;
	265	+	27 (C) officers;
	266	+	28 (D) agents; and
	267	+	29 (E) employees;
	268	+	30 of the system.
	269	+	31 (b) In addition to the immunity provided under subsection (a),
	270	+	32 the following are entitled to indemnification from the system for all
	271	+	33 losses, costs, and expenses, including reasonable attorney's fees,
	272	+	34 associated with defending against any claim or suit relating to an
	273	+	35 act authorized under this chapter:
	274	+	36 (1) Officers, agents, and employees of the state.
	275	+	37 (2) The:
	276	+	38 (A) board members;
	277	+	39 (B) executive director;
	278	+	40 (C) officers;
	279	+	41 (D) agents; and
	280	+	42 (E) employees;
	281	+	EH 1008—LS 6994/DI 141 6
	282	+	1 of the system.
	283	+	2 Sec. 13. This chapter does not apply directly to the defined
	284	+	3 contribution plans or an annuity savings account described in
	285	+	4 section 5(b) of this chapter or a private market fund (as defined in
	286	+	5 IC 5-10.2-10-11). However, the board shall:
	287	+	6 (1) ensure that reasonable efforts are made during the due
	288	+	7 diligence process before an investment is made and in
	289	+	8 monitoring investments in:
	290	+	9 (A) the public employees' defined contribution plan
	291	+	10 established under IC 5-10.3-12;
	292	+	11 (B) an annuity savings account for the public employees'
	293	+	12 retirement fund established under IC 5-10.2-2-2(a)(1);
	294	+	13 (C) the teachers' defined contribution plan established
	295	+	14 under IC 5-10.4-8;
	296	+	15 (D) an annuity savings account for the Indiana state
	297	+	16 teachers' retirement fund established under
	298	+	17 IC 5-10.2-2-2(c)(1);
	299	+	18 (E) the legislators' defined contribution plan established
	300	+	19 under IC 2-3.5-5; or
	301	+	20 (F) a private market fund (as defined in IC 5-10.2-10-11);
	302	+	21 to determine whether any investments would violate section
	303	+	22 9 of this chapter; and
	304	+	23 (2) take appropriate action, if necessary, consistent with the
	305	+	24 board's fiduciary duties.
	306	+	25 SECTION 2. IC 5-10.5-5-1, AS AMENDED BY P.L.86-2018,
	307	+	26 SECTION 19, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
	308	+	27 JULY 1, 2023]: Sec. 1. The board has the powers, duties, restrictions,
	309	+	28 limitations, and penalties in connection with the board's investment and
	310	+	29 management of the assets of the public pension and retirement funds
	311	+	30 of the system under the following provisions:
	312	+	31 (1) IC 5-10.2-2-2.5.
	313	+	32 (2) IC 5-10.2-2-13.
	314	+	33 (3) IC 5-10.3-3-7.1.
	315	+	34 (4) IC 5-10.3-5-3.
	316	+	35 (5) IC 5-10.3-5-3.1.
	317	+	36 (6) IC 5-10.3-5-4.
	318	+	37 (7) IC 5-10.3-5-5.
	319	+	38 (8) IC 5-10.3-5-6.
	320	+	39 (9) IC 5-10.4-3-7.
	321	+	40 (10) IC 5-10.4-3-9.
	322	+	41 (11) IC 5-10.4-3-10.
	323	+	42 (12) IC 5-10.4-3-11.
	324	+	EH 1008—LS 6994/DI 141 7
	325	+	1 (13) IC 5-10.4-3-12.
	326	+	2 (14) IC 5-10.4-3-13.
	327	+	3 (15) IC 5-10.4-3-14.
	328	+	4 (16) IC 5-10.4-3-15.
	329	+	5 (17) IC 5-10.4-3-16.
	330	+	6 (18) IC 5-10.2-14.
	331	+	7 SECTION 3. IC 34-30-2.1-36.6 IS ADDED TO THE INDIANA
	332	+	8 CODE AS A NEW SECTION TO READ AS FOLLOWS
	333	+	9 [EFFECTIVE JULY 1, 2023]: Sec. 36.6. IC 5-10.2-14-12 (Concerning
	334	+	10 the Indiana public retirement system).
	335	+	EH 1008—LS 6994/DI 141 8
	336	+	COMMITTEE REPORT
	337	+	Mr. Speaker: Your Committee on Financial Institutions, to which
	338	+	was referred House Bill 1008, has had the same under consideration
	339	+	and begs leave to report the same back to the House with the
	340	+	recommendation that said bill be amended as follows:
	341	+	Page 2, delete lines 39 through 42.
	342	+	Page 3, delete lines 1 through 5, begin a new paragraph and insert:
	343	+	"Sec. 5. (a) As used in this chapter, "governmental entity"
	344	+	means any of the following:
	345	+	(1) The state of Indiana.
	346	+	(2) An authority, a board, a branch, a commission, a
	347	+	committee, a department, or other instrumentality of any of
	348	+	the following:
	349	+	(A) The executive, including the administrative department
	350	+	of state government.
	351	+	(B) The legislative department of state government.
	352	+	(C) The judicial department of state government.
	353	+	(D) A body corporate and politic created by statute.
	354	+	(3) The board.
	355	+	(b) The term does not include the following:
	356	+	(1) A state educational institution (as defined in
	357	+	IC 21-7-13-32).
	358	+	(2) A public school corporation (as defined in IC 4-4-38.5-6.2).
	359	+	(3) A political subdivision.
	360	+	Sec. 5.5. As used in this chapter, "person" means a natural
	361	+	person, corporation, limited liability company, partnership, or
	362	+	other business unit or association.".
	363	+	Page 3, delete lines 12 through 19, begin a new paragraph and
	364	+	insert:
	365	+	"Sec. 7. (a) As used in this chapter, "public pension system"
	366	+	consists of:
	367	+	(1) the public pension or retirement funds listed in
	368	+	IC 5-10.5-2-2;
	369	+	(2) the state police pension trust under IC 10-12-2-2; and
	370	+	(3) except as provided in subsection (b), any other retirement
	371	+	or pension plan maintained, provided, or offered by a
	372	+	governmental entity.
	373	+	(b) The term does not include a sheriff's pension trust under
	374	+	IC 36-8-10-12.".
	375	+	Page 5, delete line 42.
	376	+	Page 6, delete lines 1 through 3, begin a new paragraph and insert:
	377	+	"(c) The treasurer of state may request that the attorney general
	378	+	EH 1008—LS 6994/DI 141 9
	379	+	provide assistance with an investigation under this chapter by
	380	+	using the attorney general's investigative authority under
	381	+	IC 4-6-3-3. A request made by the treasurer of state under this
	382	+	subsection must:
	383	+	(1) be in writing; and
	384	+	(2) identify the name of the person or a specific fund of the
	385	+	person that is subject to the investigation.
	386	+	(d) If, after investigation, the treasurer of state determines that
	387	+	a person has engaged in, is engaging in, or is going to engage in a
	388	+	violation of this chapter, the treasurer of state shall make available
	389	+	to the public the name of the person or a specific fund offered by
	390	+	the person.
	391	+	(e) The treasurer of state shall provide written notice to the
	392	+	person of the treasurer of state's determination that the person or
	393	+	a specific fund offered by the person has engaged in, is engaging in,
	394	+	or is going to engage in a violation of this chapter. The written
	395	+	notice under this subsection must:
	396	+	(1) contain a warning that the person or a specific fund
	397	+	offered by the person may be subject to divestment or
	398	+	termination of a business relationship with the board; and
	399	+	(2) offer the person the opportunity to clarify the activities of
	400	+	the person or a specific fund offered by the person related to
	401	+	the requirements of this chapter.
	402	+	(f) Not later than ninety (90) days after the date the person
	403	+	receives a written notice under subsection (e), the person shall
	404	+	demonstrate to the treasurer of state that the person or a specific
	405	+	fund offered by the person is in compliance with the requirements
	406	+	of this chapter.
	407	+	(g) If the treasurer of state determines that the person or a
	408	+	specific fund of the person is in compliance with the requirements
	409	+	of this chapter, the treasurer of state shall make the determination
	410	+	under this subsection available to the public.
	411	+	(h) If the treasurer of state determines that the person or a
	412	+	specific fund offered by the person is not in compliance with the
	413	+	requirements of this chapter after the ninety (90) day period under
	414	+	subsection (f), the treasurer of state shall provide the name of the
	415	+	person or a specific fund offered by the person to the board.
	416	+	Sec. 17. (a) Not later than one hundred eighty (180) days after
	417	+	the board receives the information under section 16(h) of this
	418	+	chapter, the board shall begin:
	419	+	(1) divesting from; and
	420	+	(2) terminating any business relationship with;
	421	+	EH 1008—LS 6994/DI 141 10
	422	+	the named person or a specific fund offered by the person
	423	+	according to the board's best judgment on the timing of the
	424	+	divestment and termination of a business relationship in order to
	425	+	maximize returns, minimize losses, and minimize management fees.
	426	+	(b) If the board determines that it is not in the best economic
	427	+	interest of the public pension system to divest from and terminate
	428	+	a business relationship with the person or a specific fund offered by
	429	+	the person, the board shall make the board's rationale available to
	430	+	the public within the one hundred eighty (180) day period under
	431	+	subsection (a). The rationale must include information detailing the
	432	+	financial reasons that led to the board's decision, including:
	433	+	(1) the expected impact of divestment on risks and returns;
	434	+	and
	435	+	(2) whether management fees influenced the board's decision.
	436	+	(c) A pension consultant that contracts with the board may
	437	+	provide the information under subsection (b) if the pension
	438	+	consultant:
	439	+	(1) has a practice of following; and
	440	+	(2) commits, in writing, to follow;
	441	+	guidelines that meet the requirements of section 8 of this chapter.
	442	+	Sec. 18. On or before December 31, 2023, the board shall amend
	443	+	the board's investment policies to comply with the requirements of
	444	+	this chapter.".
	445	+	Page 6, line 4, delete "17." and insert "19.".
	446	+	and when so amended that said bill do pass.
	447	+	(Reference is to HB 1008 as introduced.)
	448	+	SPEEDY
	449	+	Committee Vote: yeas 9, nays 4.
	450	+	_____
	451	+	COMMITTEE REPORT
	452	+	Mr. Speaker: Your Committee on Ways and Means, to which was
	453	+	referred House Bill 1008, has had the same under consideration and
	454	+	begs leave to report the same back to the House with the
	455	+	recommendation that said bill be amended as follows:
	456	+	Page 1, delete lines 1 through 17.
	457	+	Page 2, delete lines 1 through 7.
	458	+	EH 1008—LS 6994/DI 141 11
	459	+	Page 2, line 8, delete "IC 5-13-15" and insert "IC 5-10.2-13".
	460	+	Page 2, line 11, delete "15." and insert "13.".
	461	+	Page 2, delete lines 18 through 19, begin a new line block indented
	462	+	and insert:
	463	+	"(2) any person accepting the role of a fiduciary by contract
	464	+	or agreement with the Indiana public retirement system, to
	465	+	the extent defined by such contract or agreement.".
	466	+	Page 2, line 22, after "as a" insert "fiduciary specifically on behalf
	467	+	of assets managed for the public pension system:".
	468	+	Page 2, delete line 23.
	469	+	Page 2, line 24, delete "letters to" and insert "letters,".
	470	+	Page 2, line 25, delete "clients,".
	471	+	Page 2, line 27, delete "Participation" and insert "Engaging in
	472	+	nonfinancial actions due to participation".
	473	+	Page 2, line 37, after "with a" insert "nonfinancial".
	474	+	Page 3, line 26, after "IC 5-10.5-2-2;" insert "and".
	475	+	Page 3, line 27, delete "IC 10-12-2-2; and" and insert "IC
	476	+	10-12-2-2.".
	477	+	Page 3, delete lines 28 through 30.
	478	+	Page 3, line 31, after "under" insert "IC 36-8-10-12 or any plan
	479	+	under IC 5-10-1.1.".
	480	+	Page 3, delete line 32.
	481	+	Page 4, delete lines 3 through 41, begin a new paragraph and insert:
	482	+	"(c) A fiduciary must discharge the fiduciary's duties consistent
	483	+	with its applicable fiduciary obligations to ensure public pension
	484	+	system assets are not used for or diverted to any purpose other
	485	+	than that purpose specified by the public pension system.
	486	+	Sec. 9. A fiduciary may be reasonably determined to have taken
	487	+	an action or considered a factor with a purpose to further social,
	488	+	political, or ideological interests based on evidence indicating the
	489	+	purpose, including a fiduciary commitment to further, through
	490	+	portfolio company engagement, board or shareholder votes, or
	491	+	otherwise as a fiduciary, any of the following beyond the
	492	+	requirements of applicable law, specifically on behalf of assets
	493	+	managed for the public pension system:
	494	+	(1) Eliminating, reducing, or offsetting greenhouse gas
	495	+	emissions for nonfinancial purposes.
	496	+	(2) Instituting:
	497	+	(A) corporate board;
	498	+	(B) employment;
	499	+	(C) composition; or
	500	+	(D) compensation;
	501	+	EH 1008—LS 6994/DI 141 12
	502	+	criteria that incorporate characteristics protected under
	503	+	IC 22-9 or applicable law.
	504	+	(3) Divesting from, limiting investment in, or limiting the
	505	+	activities or investments of a company:
	506	+	(A) that:
	507	+	(i) fails to meet or does not commit to environmental
	508	+	standards or disclosures;
	509	+	(ii) engages in, facilitates, or supports the manufacture,
	510	+	import, distribution, marketing or advertising, sale, or
	511	+	lawful use of firearms, ammunition, or components parts
	512	+	and accessories of firearms or ammunition;
	513	+	(iii) contracts with the United States Immigration and
	514	+	Customs Enforcement for the provision of federal
	515	+	immigration detention centers or support services
	516	+	related to the implementation of federal immigration
	517	+	and border security laws, regulations, and policies; or
	518	+	(iv) engages in the exploration, production, utilization,
	519	+	transportation, sale, or manufacturing of fossil fuel
	520	+	based energy, timber, mining, agriculture, and food
	521	+	animal production; and
	522	+	(B) for nonfinancial purposes.
	523	+	Sec. 10. Compliance with this chapter does not impose any
	524	+	additional fiduciary obligations on a person, other than to the
	525	+	extent required by law or the applicable contract or agreement.".
	526	+	Page 5, delete lines 5 through 26, begin a new paragraph and insert:
	527	+	"Sec. 12. (a) This section does not apply to a private market fund
	528	+	(as defined in IC 5-10.2-10-11).
	529	+	(b) To the extent economically feasible, a governmental entity
	530	+	that administers a fund of the public pension system may not grant
	531	+	proxy voting authority to a person who is not a public employee
	532	+	unless the person:
	533	+	(1) has a practice of following; and
	534	+	(2) commits, in writing, to follow;
	535	+	guidelines that meet the requirements of section 8 of this chapter.
	536	+	Sec. 13. (a) This section does not apply to a private market fund
	537	+	(as defined in IC 5-10.2-10-11).
	538	+	(b) To the extent economically feasible, assets of the public
	539	+	pension system may not be entrusted to a fiduciary, unless the
	540	+	fiduciary:
	541	+	(1) has a practice of following; and
	542	+	(2) commits, in writing, to follow;
	543	+	guidelines that meet the requirements of section 8 of this chapter
	544	+	EH 1008—LS 6994/DI 141 13
	545	+	when the fiduciary engages with portfolio companies and voting
	546	+	shares or proxies.
	547	+	Sec. 14. (a) This section does not apply to a private market fund
	548	+	(as defined in IC 5-10.2-10-11).
	549	+	(b) To the extent economically feasible, a fiduciary may not
	550	+	follow the recommendations of a proxy advisor or other service
	551	+	provider, unless the proxy advisor or service provider:
	552	+	(1) has a practice of following; and
	553	+	(2) commits, in writing, to follow;
	554	+	proxy voting guidelines that meet the requirements of section 8 of
	555	+	this chapter.".
	556	+	Page 5, line 27, delete "A governmental entity" and insert "The
	557	+	board".
	558	+	Page 5, line 28, after "made" insert "by any fiduciary".
	559	+	Page 5, delete lines 38 through 39.
	560	+	Page 5, line 40, delete "(d)" and insert "(c)".
	561	+	Page 7, delete lines 9 through 33, begin a new paragraph and insert:
	562	+	"Sec. 17. (a) Not later than one hundred eighty (180) days after
	563	+	the board receives the information under section 16(h) of this
	564	+	chapter, the board shall begin:
	565	+	(1) divesting from; and
	566	+	(2) terminating any business relationship with;
	567	+	the named person or a specific fund offered by the person
	568	+	according to the board's best judgment on the timing of the
	569	+	divestment and termination of a business relationship in order to
	570	+	maximize returns, minimize losses, and minimize management fees.
	571	+	(b) If the board determines that it is not consistent with its
	572	+	fiduciary responsibility with respect to the investment of entity
	573	+	assets or other duties imposed by law relating to the investment of
	574	+	entity assets to divest from and terminate a business relationship
	575	+	with the person or a specific fund offered by the person, the board
	576	+	shall make the board's rationale available to the public within the
	577	+	one hundred eighty (180) day period under subsection (a). The
	578	+	rationale must include information detailing the financial reasons
	579	+	that led to the board's decision, including:
	580	+	(1) the expected impact of divestment on risks and returns;
	581	+	and
	582	+	(2) whether management fees influenced the board's decision.
	583	+	(c) To the extent economically feasible, a pension consultant that
	584	+	contracts with the board may provide the information under
	585	+	subsection (b) if the pension consultant:
	586	+	(1) has a practice of following; and
	587	+	EH 1008—LS 6994/DI 141 14
	588	+	(2) commits, in writing, to follow;
	589	+	guidelines that meet the requirements of section 8 of this chapter.
	590	+	(d) If:
	591	+	(1) the treasurer of state determines that a person or specific
	592	+	fund offered by the person is not in compliance with the
	593	+	requirements of this chapter under section 16(h) of this
	594	+	chapter; and
	595	+	(2) the board takes a vote under this section concerning
	596	+	whether to divest from or terminate a business relationship
	597	+	with a person or specific fund described in subdivision (1);
	598	+	the treasurer of state may not cast a vote under subdivision (2).".
	599	+	Page 7, between lines 36 and 37, begin a new paragraph and insert:
	600	+	"Sec. 19. (a) The following are immune from civil liability for
	601	+	any act or omission related to any action under this chapter:
	602	+	(1) The state.
	603	+	(2) Officers, agents, and employees of the state.
	604	+	(3) The system.
	605	+	(4) The:
	606	+	(A) board members;
	607	+	(B) executive director;
	608	+	(C) officers;
	609	+	(D) agents; and
	610	+	(E) employees;
	611	+	of the system.
	612	+	(b) In addition to the immunity provided under subsection (a),
	613	+	the following are entitled to indemnification from the system for all
	614	+	losses, costs, and expenses, including reasonable attorney's fees,
	615	+	associated with defending against any claim or suit relating to an
	616	+	act authorized under this chapter:
	617	+	(1) Officers, agents, and employees of the state.
	618	+	(2) The:
	619	+	(A) board members;
	620	+	(B) executive director;
	621	+	(C) officers;
	622	+	(D) agents; and
	623	+	(E) employees;
	624	+	of the system.".
	625	+	Page 7, line 37, delete "19." and insert "20.".
	626	+	Page 7, after line 38, begin a new paragraph and insert:
	627	+	"SECTION 2. IC 5-10.5-5-1, AS AMENDED BY P.L.86-2018,
	628	+	SECTION 19, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
	629	+	JULY 1, 2023]: Sec. 1. The board has the powers, duties, restrictions,
	630	+	EH 1008—LS 6994/DI 141 15
	631	+	limitations, and penalties in connection with the board's investment and
	632	+	management of the assets of the public pension and retirement funds
	633	+	of the system under the following provisions:
	634	+	(1) IC 5-10.2-2-2.5.
	635	+	(2) IC 5-10.2-2-13.
	636	+	(3) IC 5-10.3-3-7.1.
	637	+	(4) IC 5-10.3-5-3.
	638	+	(5) IC 5-10.3-5-3.1.
	639	+	(6) IC 5-10.3-5-4.
	640	+	(7) IC 5-10.3-5-5.
	641	+	(8) IC 5-10.3-5-6.
	642	+	(9) IC 5-10.4-3-7.
	643	+	(10) IC 5-10.4-3-9.
	644	+	(11) IC 5-10.4-3-10.
	645	+	(12) IC 5-10.4-3-11.
	646	+	(13) IC 5-10.4-3-12.
	647	+	(14) IC 5-10.4-3-13.
	648	+	(15) IC 5-10.4-3-14.
	649	+	(16) IC 5-10.4-3-15.
	650	+	(17) IC 5-10.4-3-16.
	651	+	(18) IC 5-10.2-13.
	652	+	SECTION 3. IC 10-12-7 IS ADDED TO THE INDIANA CODE AS
	653	+	A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY
	654	+	1, 2023]:
	655	+	Chapter 7. Fiduciary Duties
	656	+	Sec. 1. As used in this chapter, the following terms have the
	657	+	meaning set forth in IC 5-10.2-13:
	658	+	(1) "Fiduciary".
	659	+	(2) "Fiduciary commitment".
	660	+	(3) "Financial".
	661	+	(4) "Person".
	662	+	(5) "Public employee".
	663	+	Sec. 2. (a) The trustee shall discharge its duties solely in the
	664	+	financial interest of the participants and beneficiaries of the trust
	665	+	for the exclusive purposes of:
	666	+	(1) providing financial benefits to participants and
	667	+	beneficiaries; and
	668	+	(2) defraying reasonable expenses of administering the trust.
	669	+	Sec. 3. A fiduciary must discharge the fiduciary's duties
	670	+	consistent with its applicable fiduciary obligations to ensure trust
	671	+	assets are not used for or diverted to any purpose other than that
	672	+	purpose specified by the trustee.
	673	+	EH 1008—LS 6994/DI 141 16
	674	+	Sec. 4. A fiduciary may be reasonably determined to have taken
	675	+	an action or considered a factor with a purpose to further social,
	676	+	political, or ideological interests based on evidence indicating the
	677	+	purpose, including a fiduciary commitment to further, through
	678	+	portfolio company engagement, board or shareholder votes, or
	679	+	otherwise as a fiduciary, any of the following beyond the
	680	+	requirements of applicable law specifically on behalf of assets
	681	+	managed for the trustee:
	682	+	(1) Eliminating, reducing, or offsetting greenhouse gas
	683	+	emissions for nonfinancial purposes.
	684	+	(2) Instituting:
	685	+	(A) corporate board;
	686	+	(B) employment;
	687	+	(C) composition; or
	688	+	(D) compensation;
	689	+	criteria that incorporate characteristics protected under
	690	+	applicable law.
	691	+	(3) Divesting from, limiting investment in, or limiting the
	692	+	activities or investments of a company:
	693	+	(A) that:
	694	+	(i) fails to meet or does not commit to environmental
	695	+	standards or disclosures;
	696	+	(ii) engages in, facilitates, or supports the manufacture,
	697	+	import, distribution, marketing or advertising, sale, or
	698	+	lawful use of firearms, ammunition, or components parts
	699	+	and accessories of firearms or ammunition;
	700	+	(iii) contracts with the United States Immigration and
	701	+	Customs Enforcement for the provision of federal
	702	+	immigration detention centers or support services
	703	+	related to the implementation of federal immigration
	704	+	and border security laws, regulations, and policies; or
	705	+	(iv) engages in the exploration, production, utilization,
	706	+	transportation, sale, or manufacturing of fossil fuel
	707	+	based energy, timber, mining, agriculture, and food
	708	+	animal production; and
	709	+	(B) for nonfinancial purposes.
	710	+	Sec. 5. Compliance with this chapter does not impose any
	711	+	additional fiduciary obligations on a person, other than to the
	712	+	extent required by law or the applicable contract or agreement.
	713	+	Sec. 6. All shares held directly or indirectly by or on behalf of:
	714	+	(1) the trust; or
	715	+	(2) the participants and beneficiaries;
	716	+	EH 1008—LS 6994/DI 141 17
	717	+	must be voted solely in the financial interest of the participants and
	718	+	beneficiaries.
	719	+	Sec. 7. To the extent economically feasible, the trustee may not:
	720	+	(1) grant proxy voting authority to a fiduciary who is not a
	721	+	public employee unless the fiduciary:
	722	+	(A) has a practice of following; and
	723	+	(B) commits, in writing, to follow;
	724	+	guidelines that meet the requirements of section 2 of this
	725	+	chapter;
	726	+	(2) entrust assets of the trust to a fiduciary, unless the
	727	+	fiduciary:
	728	+	(A) has a practice of following; and
	729	+	(B) commits, in writing, to follow;
	730	+	guidelines that meet the requirements of section 2 of this
	731	+	chapter when the fiduciary engages with portfolio companies
	732	+	and voting shares or proxies;
	733	+	(3) follow the recommendations of a proxy advisor or other
	734	+	service provider, unless the proxy advisor or service provider:
	735	+	(A) has a practice of following; and
	736	+	(B) commits, in writing, to follow;
	737	+	proxy voting guidelines that meet the requirements of section
	738	+	2 of this chapter.
	739	+	Sec. 8. The trustee shall, at least annually, tabulate and report
	740	+	all proxy votes made in relation to the administration of the trust
	741	+	and make such report available on its website. For each vote
	742	+	reported, the report must contain:
	743	+	(1) a vote caption;
	744	+	(2) the fund's vote;
	745	+	(3) the recommendation of a portfolio company's
	746	+	management; and
	747	+	(4) if applicable, the recommendation of a proxy advisor or
	748	+	other service provider.
	749	+	Sec. 9. (a) If the trustee has reasonable cause to believe that a
	750	+	fiduciary has engaged in, is engaging in, or is going to engage in a
	751	+	violation of this chapter, the trustee may do any of the following:
	752	+	(1) Require the fiduciary to:
	753	+	(A) file, on a form prescribed by the trustee, a written
	754	+	statement describing the facts and circumstances
	755	+	concerning the violation; and
	756	+	(B) provide any other data or information that the trustee
	757	+	deems necessary.
	758	+	(2) Examine a record, book, document, account, or paper as
	759	+	EH 1008—LS 6994/DI 141 18
	760	+	the trustee deems necessary.
	761	+	(b) The trustee may request that the attorney general provide
	762	+	assistance with an investigation under this section by using the
	763	+	attorney general's investigative authority under IC 4-6-3-3. A
	764	+	request made by the trustee under this subsection must:
	765	+	(1) be in writing; and
	766	+	(2) identify the name of the fiduciary or a specific fund of the
	767	+	fiduciary that is subject to the investigation.
	768	+	(c) If, after investigation, the trustee determines that a fiduciary
	769	+	has engaged in, is engaging in, or is going to engage in a violation
	770	+	of this section, the trustee shall make available to the public the
	771	+	name of the fiduciary or a specific fund offered by the fiduciary.
	772	+	(d) The trustee shall provide written notice to the fiduciary of
	773	+	the trustee's determination that the fiduciary or a specific fund
	774	+	offered by the fiduciary has engaged in, is engaging in, or is going
	775	+	to engage in a violation of this chapter. The written notice under
	776	+	this subsection must:
	777	+	(1) contain a warning that the fiduciary or a specific fund
	778	+	offered by the fiduciary may be subject to divestment or
	779	+	termination of a business relationship with the trustee; and
	780	+	(2) offer the fiduciary the opportunity to clarify the activities
	781	+	of the fiduciary or a specific fund offered by the fiduciary
	782	+	related to the requirements of this chapter.
	783	+	(e) Not later than ninety (90) days after the date the fiduciary
	784	+	receives a written notice under subsection (d), the fiduciary shall
	785	+	demonstrate to the trustee that the fiduciary or a specific fund
	786	+	offered by the fiduciary is in compliance with the requirements of
	787	+	this chapter.
	788	+	(f) If the trustee determines that the fiduciary or a specific fund
	789	+	of the fiduciary is in compliance with the requirements of this
	790	+	chapter, the trustee shall make the determination under this
	791	+	subsection available to the public.
	792	+	(g) If the trustee determines that the fiduciary or a specific fund
	793	+	offered by the fiduciary is not in compliance with the requirements
	794	+	of this chapter after the ninety (90) day period under subsection
	795	+	(e), the trustee shall make such determination at a public trustee
	796	+	meeting and shall inform the interim study committee on pension
	797	+	management oversight.
	798	+	Sec. 10. (a) Not later than one hundred eighty (180) days after
	799	+	the trustee makes the determination under section 9(g) of this
	800	+	chapter, the trustee shall begin:
	801	+	(1) divesting from; and
	802	+	EH 1008—LS 6994/DI 141 19
	803	+	(2) terminating any business relationship with;
	804	+	the named fiduciary or a specific fund offered by the fiduciary
	805	+	according to the trustee's best judgment on the timing of the
	806	+	divestment and termination of a business relationship in order to
	807	+	maximize returns, minimize losses, and minimize management fees.
	808	+	(b) If the trustee determines that it is not in the best economic
	809	+	interest of the trustee assets to divest from and terminate a
	810	+	business relationship with the fiduciary or a specific fund offered
	811	+	by the fiduciary, the trustee shall make the trustee's rationale
	812	+	available to the public within the one hundred eighty (180) day
	813	+	period under subsection (a). The rationale must include
	814	+	information detailing the financial reasons that led to the trustee's
	815	+	decision, including:
	816	+	(1) the expected impact of divestment on risks and returns;
	817	+	and
	818	+	(2) whether management fees influenced the trustee's
	819	+	decision.
	820	+	(c) A pension consultant that contracts with the trustee may
	821	+	provide the necessary information if the pension consultant:
	822	+	(1) has a practice of following; and
	823	+	(2) commits, in writing, to follow;
	824	+	guidelines that meet the requirements of section 2 of this chapter.
	825	+	Sec. 11. (a) The following are immune from civil liability for any
	826	+	act or omission related to any action under this chapter:
	827	+	(1) The state.
	828	+	(2) Officers, agents, and employees of the state.
	829	+	(b) In addition to the immunity provided under subsection (a),
	830	+	officers, agents, and employees of the state are entitled to
	831	+	indemnification from the system for all losses, costs, and expenses,
	832	+	including reasonable attorney's fees, associated with defending
	833	+	against any claim or suit relating to an act authorized under this
	834	+	chapter.
	835	+	Sec. 12. On or before December 31, 2023, the trustee shall
	836	+	amend the trustee's investment policies to comply with the
	837	+	requirements of this chapter.
	838	+	SECTION 4. IC 34-30-2.1-36.2 IS ADDED TO THE INDIANA
	839	+	CODE AS A NEW SECTION TO READ AS FOLLOWS
	840	+	[EFFECTIVE JULY 1, 2023]: Sec. 36.2. IC 5-10.2-13-19 (concerning
	841	+	fiduciary duties and divestment related to certain public pension
	842	+	funds).
	843	+	SECTION 5. IC 34-30-2.1-114.5 IS ADDED TO THE INDIANA
	844	+	CODE AS A NEW SECTION TO READ AS FOLLOWS
	845	+	EH 1008—LS 6994/DI 141 20
	846	+	[EFFECTIVE JULY 1, 2023]: Sec. 114.5. IC 10-12-7-11 (concerning
	847	+	fiduciary duties and divestment related to certain public pension
	848	+	funds).".
	849	+	Renumber all SECTIONS consecutively.
	850	+	and when so amended that said bill do pass.
	851	+	(Reference is to HB 1008 as printed February 2, 2023.)
	852	+	THOMPSON
	853	+	Committee Vote: yeas 15, nays 8.
	854	+	_____
	855	+	COMMITTEE REPORT
	856	+	Madam President: The Senate Committee on Pensions and Labor,
	857	+	to which was referred House Bill No. 1008, has had the same under
	858	+	consideration and begs leave to report the same back to the Senate with
	859	+	the recommendation that said bill be AMENDED as follows:
	860	+	Page 1, delete lines 1 through 17, begin a new paragraph and insert:
	861	+	"SECTION 1. IC 5-10.2-14 IS ADDED TO THE INDIANA CODE
15	862		AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
16	863		JULY 1, 2023]:
17	864		Chapter 14. ESG Commitment
18	865		Sec. 1. This chapter does not apply to:
19	866		(1) a bank holding company (as defined in IC 28-2-16-3 or
20	867		IC 28-2-16-9);
21	868		(2) a subsidiary of a bank holding company (as defined in
22	869		IC 28-2-16-3 or IC 28-2-16-9); or
23	870		(3) an action taken or a factor considered pursuant to the
24	871		requirements of this chapter by a trustee for a:
25	872		(A) bank holding company described in subdivision (1); or
26	873		(B) subsidiary of a bank holding company described in
27	874		subdivision (2).
28	875		Sec. 2. (a) As used in this chapter, "ESG commitment" means
29	876		an action taken or a factor considered by a service provider:
30	877		(1) with respect to or including the system's assets; and
31	878		(2) with the nonfinancial purpose to further social, political,
32	879		or ideological interests based on evidence indicating the
33	880		purpose.
34	881		(b) The term defined in subsection (a) includes a commitment to
35	882		further, through portfolio company engagement or board or
	883	+	EH 1008—LS 6994/DI 141 21
36	884		shareholder votes, any of the following for nonfinancial purposes
37		-	HEA 1008 — Concur 2
38	885		beyond the applicable law requirements:
39	886		(1) Eliminating, reducing, offsetting, or disclosing greenhouse
40	887		gas emissions.
41	888		(2) Instituting or assessing:
42	889		(A) corporate board;
43	890		(B) employment;
44	891		(C) composition;
45	892		(D) compensation; or
46	893		(E) disclosure;
47	894		criteria that incorporate characteristics protected under
48	895		IC 22-9.
49	896		(3) Divesting from, limiting investment in, or limiting the
50	897		activities or investments of a company that does any of the
51	898		following:
52	899		(A) Fails to meet or does not commit to environmental
53	900		standards or disclosures.
54	901		(B) Engages in, facilitates, or supports the manufacture,
55	902		import, distribution, marketing or advertising, sale, or
56	903		lawful use of firearms, ammunition, or component parts
57	904		and accessories of firearms or ammunition.
58	905		(C) Contracts with the United States Immigration and
59	906		Customs Enforcement for the provision of federal
60	907		immigration detention centers or support services related
61	908		to the implementation of federal immigration and border
62	909		security laws, regulations, and policies.
63	910		(D) Engages in the exploration, production, utilization,
64	911		transportation, sale, or manufacturing of fossil fuel based
65	912		energy, timber, mining, agriculture, and food animal
66	913		production.
67	914		Sec. 3. (a) As used in this chapter, "financial" means a prudent
68	915		determination by a fiduciary to have a material effect on the
69	916		monetary risk or the monetary return of an investment.
70	917		(b) The term does not include an action taken or a factor
71	918		considered by a fiduciary with the nonfinancial purpose to further
72	919		social, political, or ideological interests as set forth in section 2 of
73	920		this chapter.
74	921		Sec. 4. As used in this chapter, "service provider" means
75	922		investment managers and proxy advisors to the system.
76	923		Sec. 5. (a) As used in this chapter and except as provided in
77	924		subsection (b), "system" refers to the Indiana public retirement
78	925		system established by IC 5-10.5-2-1.
	926	+	EH 1008—LS 6994/DI 141 22
79	927		(b) The term does not include the following:
80		-	HEA 1008 — Concur 3
81	928		(1) The public employees' defined contribution plan
82	929		established under IC 5-10.3-12.
83	930		(2) An annuity savings account for the public employees'
84	931		retirement fund established under IC 5-10.2-2-2(a)(1).
85	932		(3) The teachers' defined contribution plan established under
86	933		IC 5-10.4-8.
87	934		(4) An annuity savings account for the Indiana state teachers'
88	935		retirement fund established under IC 5-10.2-2-2(c)(1).
89	936		(5) The legislators' defined contribution plan established
90	937		under IC 2-3.5-5.
91	938		Sec. 6. Factors to be considered as evidence of a service
92	939		provider's ESG commitment may include one (1) or more of the
93	940		following:
94	941		(1) Advertising.
95	942		(2) Statements.
96	943		(3) Explanations.
97	944		(4) Reports.
98	945		(5) Letters to clients.
99	946		(6) Communications with portfolio companies.
100	947		(7) Statements of principles.
101	948		(8) Participation in, affiliation with, or status as a signatory
102	949		to:
103	950		(A) a coalition;
104	951		(B) an initiative;
105	952		(C) a joint statement of principles; or
106	953		(D) an agreement.
107	954		Sec. 7. If the treasurer of state has reasonable cause to believe
108	955		that a service provider has made an ESG commitment, the
109	956		treasurer of state shall research the matter and make a
110	957		determination as to whether the service provider has made an ESG
111	958		commitment. In conducting this research, the treasurer of state
112	959		shall attempt to consult with the service provider and consider any
113	960		information the service provider provides to the treasurer of state.
114	961		If the treasurer of state concludes that the service provider has
115		-	made an ESG commitment, the treasurer of state shall provide the:
116		-	(1) name of the service provider; and
117		-	(2) research supporting the conclusion;
	962	+	made an ESG commitment, the treasurer of state shall:
	963	+	(1) place the name of the service provider on a list maintained
	964	+	and published by the treasurer of state; and
	965	+	(2) provide the:
	966	+	(A) name of the service provider; and
	967	+	(B) research supporting the conclusion;
118	968		to the board.
	969	+	EH 1008—LS 6994/DI 141 23
119	970		Sec. 8. (a) Except as otherwise provided by law, the board may
120	971		not make an investment decision with the purpose of:
121	972		(1) influencing any social or environmental policy; or
122	973		(2) attempting to influence the governance of any corporation
123		-	HEA 1008 — Concur 4
124	974		for nonfinancial purposes.
125	975		(b) Except as otherwise provided by law, the system is
126	976		prohibited from making an ESG commitment with respect to
127	977		system assets, including without limitation in the selection of
128	978		investments, selection of investment managers, management or
129	979		oversight of investments, proxy voting, or shareholder engagement.
130	980		Sec. 9. (a) In making and supervising investments of the system,
131	981		the board shall discharge its duties solely in the financial interest
132	982		of the participants and beneficiaries of the system for the exclusive
133	983		purposes of:
134	984		(1) providing financial benefits to participants and
135	985		beneficiaries; and
136	986		(2) defraying reasonable expenses of administering the
137	987		system.
138	988		(b) The board, in accordance with the fiduciary duties described
139	989		in this article, shall make investment decisions with the primary
140	990		purpose of maximizing the target rate of return on the board's
141	991		investments.
142	992		Sec. 10. (a) In accordance with the board's duty under section
143	993		9 of this chapter, and except as provided in subsection (c), the
144	994		board shall not:
145	995		(1) enter a contract; or
146	996		(2) modify, amend, or continue a contract;
147		-	with a service provider that has made an ESG commitment unless
148		-	taking the action described in subdivisions (1) and (2) violates the
149		-	board's fiduciary duty to the system's participants and
150		-	beneficiaries.
	997	+	with a service provider that has made an ESG commitment and is
	998	+	on the list maintained and published by the treasurer of state under
	999	+	section 7 of this chapter, unless taking the action described in
	1000	+	subdivisions (1) and (2) violates the board's fiduciary duty to the
	1001	+	system's participants and beneficiaries.
151	1002		(b) The board shall replace a service provider that has made an
152	1003		ESG commitment with a service provider that is comparable in
153	1004		financial performance, so as not to violate the board's fiduciary
154	1005		duty to the system's participants and beneficiaries. If the board
155	1006		replaces a service provider, it shall do so within a reasonable time,
156	1007		but not later than one hundred eighty (180) days after receiving
157	1008		notice from the treasurer of state of the service provider's ESG
158	1009		commitment.
159	1010		(c) If the board determines that there is not a comparable
160	1011		service provider to replace a service provider under subsection (b),
	1012	+	EH 1008—LS 6994/DI 141 24
161	1013		the board shall continue contracting with the service provider that
162	1014		has made an ESG commitment. The board shall include in its
163	1015		minutes the:
164	1016		(1) decision that a comparable service provider does not exist;
165	1017		and
166		-	HEA 1008 — Concur 5
167	1018		(2) evidence supporting the decision under subdivision (1).
168	1019		Sec. 11. The board shall, at least annually, tabulate and report
169	1020		all proxy votes made by a service provider that is not a private
170	1021		market fund (as defined in IC 5-10.2-10-11) in relation to the
171	1022		administration of the system. For each vote reported, the report
172	1023		must contain:
173	1024		(1) a vote caption;
174	1025		(2) the fund's vote;
175	1026		(3) the recommendation of the portfolio company's
176	1027		management; and
177	1028		(4) if applicable, the recommendation of a proxy advisor or
178	1029		other service provider.
179	1030		Sec. 12. (a) The following are immune from civil liability for any
180	1031		act or omission related to any action under this chapter:
181	1032		(1) The state.
182	1033		(2) Officers, agents, and employees of the state.
183	1034		(3) The system.
184	1035		(4) The:
185	1036		(A) board members;
186	1037		(B) executive director;
187	1038		(C) officers;
188	1039		(D) agents; and
189	1040		(E) employees;
190	1041		of the system.
191	1042		(b) In addition to the immunity provided under subsection (a),
192	1043		the following are entitled to indemnification from the system for all
193	1044		losses, costs, and expenses, including reasonable attorney's fees,
194	1045		associated with defending against any claim or suit relating to an
195	1046		act authorized under this chapter:
196	1047		(1) Officers, agents, and employees of the state.
197	1048		(2) The:
198	1049		(A) board members;
199	1050		(B) executive director;
200	1051		(C) officers;
201	1052		(D) agents; and
202	1053		(E) employees;
203	1054		of the system.
	1055	+	EH 1008—LS 6994/DI 141 25
204	1056		Sec. 13. This chapter does not apply directly to the defined
205	1057		contribution plans or an annuity savings account described in
206	1058		section 5(b) of this chapter or a private market fund (as defined in
207	1059		IC 5-10.2-10-11). However, the board shall:
208	1060		(1) ensure that reasonable efforts are made during the due
209		-	HEA 1008 — Concur 6
210	1061		diligence process before an investment is made and in
211	1062		monitoring investments in:
212	1063		(A) the public employees' defined contribution plan
213	1064		established under IC 5-10.3-12;
214	1065		(B) an annuity savings account for the public employees'
215	1066		retirement fund established under IC 5-10.2-2-2(a)(1);
216	1067		(C) the teachers' defined contribution plan established
217	1068		under IC 5-10.4-8;
218	1069		(D) an annuity savings account for the Indiana state
219	1070		teachers' retirement fund established under
220	1071		IC 5-10.2-2-2(c)(1);
221	1072		(E) the legislators' defined contribution plan established
222	1073		under IC 2-3.5-5; or
223	1074		(F) a private market fund (as defined in IC 5-10.2-10-11);
224	1075		to determine whether any investments would violate section
225	1076		9 of this chapter; and
226	1077		(2) take appropriate action, if necessary, consistent with the
227		-	board's fiduciary duties.
228		-	SECTION 2. IC 5-10.5-5-1, AS AMENDED BY P.L.86-2018,
229		-	SECTION 19, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
230		-	JULY 1, 2023]: Sec. 1. The board has the powers, duties, restrictions,
231		-	limitations, and penalties in connection with the board's investment and
232		-	management of the assets of the public pension and retirement funds
233		-	of the system under the following provisions:
234		-	(1) IC 5-10.2-2-2.5.
235		-	(2) IC 5-10.2-2-13.
236		-	(3) IC 5-10.3-3-7.1.
237		-	(4) IC 5-10.3-5-3.
238		-	(5) IC 5-10.3-5-3.1.
239		-	(6) IC 5-10.3-5-4.
240		-	(7) IC 5-10.3-5-5.
241		-	(8) IC 5-10.3-5-6.
242		-	(9) IC 5-10.4-3-7.
243		-	(10) IC 5-10.4-3-9.
244		-	(11) IC 5-10.4-3-10.
245		-	(12) IC 5-10.4-3-11.
246		-	(13) IC 5-10.4-3-12.
247		-	(14) IC 5-10.4-3-13.
248		-	(15) IC 5-10.4-3-14.
249		-	(16) IC 5-10.4-3-15.
250		-	(17) IC 5-10.4-3-16.
251		-	(18) IC 5-10.2-14.
252		-	HEA 1008 — Concur 7
253		-	SECTION 3. IC 34-30-2.1-36.6 IS ADDED TO THE INDIANA
	1078	+	board's fiduciary duties.".
	1079	+	Delete pages 2 through 7.
	1080	+	Page 8, delete lines 1 through 16.
	1081	+	Page 8, line 40, delete "IC 5-10.2-13." and insert "IC 5-10.2-14.".
	1082	+	Page 8, delete lines 41 through 42, begin a new paragraph and
	1083	+	insert:
	1084	+	"SECTION 3. IC 34-30-2.1-36.6 IS ADDED TO THE INDIANA
254	1085		CODE AS A NEW SECTION TO READ AS FOLLOWS
255	1086		[EFFECTIVE JULY 1, 2023]: Sec. 36.6. IC 5-10.2-14-12 (Concerning
256		-	the Indiana public retirement system).
257		-	HEA 1008 — Concur Speaker of the House of Representatives
258		-	President of the Senate
259		-	President Pro Tempore
260		-	Governor of the State of Indiana
261		-	Date: Time:
262		-	HEA 1008 — Concur
	1087	+	the Indiana public retirement system).".
	1088	+	Delete pages 9 through 13.
	1089	+	Renumber all SECTIONS consecutively.
	1090	+	and when so amended that said bill do pass.
	1091	+	(Reference is to HB 1008 as printed February 21, 2023.)
	1092	+	ROGERS, Chairperson
	1093	+	Committee Vote: Yeas 7, Nays 3.
	1094	+	EH 1008—LS 6994/DI 141 26
	1095	+	SENATE MOTION
	1096	+	Madam President: I move that Engrossed House Bill 1008 be
	1097	+	amended to read as follows:
	1098	+	Page 3, line 41, delete "shall:" and insert "shall provide the:
	1099	+	(1) name of the service provider; and
	1100	+	(2) research supporting the conclusion;
	1101	+	to the board.".
	1102	+	Page 3, delete line 42.
	1103	+	Page 4, delete lines 1 through 5.
	1104	+	Page 4, line 33, delete "and is".
	1105	+	Page 4, delete line 34.
	1106	+	Page 4, line 35, delete "section 7 of this chapter,".
	1107	+	(Reference is to EHB 1008 as printed April 7, 2023.)
	1108	+	HOLDMAN
	1109	+	EH 1008—LS 6994/DI 141