Public Act 103-0468
 
SB2152 EnrolledLRB103 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 
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.