House File 2331 H-8012 Amend House File 2331 as follows: 1 1. Page 5, after line 16 by inserting: 2 < Sec. ___. NEW SECTION . 12K.1 Legislative findings 3 and intent. 4 The general assembly is deeply concerned over 5 the impact of fossil fuels on global climate change. 6 Therefore, the general assembly intends that state 7 funds and funds administered by the state, including 8 public employee retirement funds, should not be 9 invested in fossil fuel companies. 10 Sec. ___. NEW SECTION . 12K.2 Definitions. 11 As used in this chapter, unless the context 12 otherwise requires: 13 1. “Company” means any business or business entity 14 that is publicly traded. 15 2. “Direct holdings” in a company means all 16 publicly traded securities of that company that are 17 held directly by the public fund in an actively managed 18 account or fund in which the public fund owns all 19 shares or interests. 20 3. “Indirect holdings” in a company means all 21 securities of that company that are held in an account 22 or fund managed by one or more persons not employed by 23 the public fund, in which the public fund owns shares 24 or interests together with other investors not subject 25 to the provisions of this chapter. Indirect holdings 26 include but are not limited to mutual funds, fund of 27 funds, index funds, private equity funds, hedge funds, 28 and real estate funds. 29 4. “Public fund” means the treasurer of state, 30 the state board of regents, the public safety peace 31 officers’ retirement system created in chapter 97A, the 32 Iowa public employees’ retirement system created in 33 chapter 97B, the statewide fire and police retirement 34 system created in chapter 411, or the judicial 35 -1- HF2331.2658 (2) 86 ec/sc 1/ 5 #1.
retirement system created in chapter 602. 1 5. “Scrutinized company” means any company included 2 on a publicly available list identifying the one 3 hundred largest public coal companies and one hundred 4 largest public oil and gas reserve owners based on the 5 potential carbon dioxide emissions of their reported 6 reserves. 7 Sec. ___. NEW SECTION . 12K.3 Identification of 8 companies —— notice. 9 1. a. By March 1, 2017, the public fund shall 10 make its best efforts to identify or have identified 11 all scrutinized companies in which the public fund has 12 direct or indirect holdings or could possibly have 13 such holdings in the future and shall create and make 14 available to the public a scrutinized companies list 15 for that public fund. The public fund shall review 16 on an annual basis and update, if necessary, the 17 scrutinized companies list. 18 b. In making its best efforts to identify or have 19 identified scrutinized companies, the public fund may 20 review and rely, in the best judgment of the public 21 fund, on publicly available information regarding 22 companies, and including other information that may be 23 provided by nonprofit organizations, research firms, 24 international organizations, and government entities. 25 The public fund may also contact asset managers and 26 institutional investors for the public fund to identify 27 scrutinized companies based upon industry-recognized 28 lists of such companies that the public fund may have 29 indirect holdings in. 30 c. The Iowa public employees’ retirement system, 31 acting on behalf of the system and other public funds 32 subject to this section, may develop and issue a 33 request for proposals for third-party services to 34 complete the identification of scrutinized companies 35 -2- HF2331.2658 (2) 86 ec/sc 2/ 5
and the compilation of a scrutinized companies list. 1 The Iowa public employees’ retirement system shall 2 consult with all other public funds on the development 3 of the request for proposals. However, selection of a 4 successful proposal and the final scope of services to 5 be provided shall be determined only by those public 6 funds that have agreed to utilize the third-party 7 services. If more than one public fund decides to 8 utilize the third-party services, the participating 9 public funds shall equally share the costs of such 10 services. 11 2. a. For each company on the scrutinized 12 companies list, the public fund shall send or have sent 13 a written notice informing the company of its status as 14 a scrutinized company and that it may become subject 15 to divestment and restrictions on investment in the 16 company by the public fund. The notice shall offer 17 the company the opportunity to clarify its activities 18 or to cease its activities causing its inclusion on 19 the scrutinized company list. The public fund or its 20 representative shall continue to provide such written 21 notice on an annual basis if the company remains a 22 scrutinized company. 23 b. If, following notice as provided by this 24 section, a scrutinized company ceases activity that 25 designates it as a scrutinized company and submits 26 a written statement to the public fund that it has 27 ceased engaging in activities that designates it as a 28 scrutinized company, the company shall be removed from 29 the scrutinized companies list. 30 Sec. ___. NEW SECTION . 12K.4 Prohibited 31 investments —— divestment. 32 1. The public fund shall not acquire publicly 33 traded securities of a company on the public fund’s 34 most recent scrutinized companies list so long as 35 -3- HF2331.2658 (2) 86 ec/sc 3/ 5
such company remains on the public fund’s scrutinized 1 companies list as provided in this chapter. 2 2. a. The public fund shall sell, redeem, divest, 3 or withdraw all publicly traded securities of a company 4 on the public fund’s list of scrutinized companies, 5 so long as the company remains on that list, within 6 eighteen months following the first written notice 7 sent to the scrutinized company as required by section 8 12K.3. 9 b. This subsection shall not be construed to 10 require the premature or otherwise imprudent sale, 11 redemption, divestment, or withdrawal of an investment, 12 but such sale, redemption, divestment, or withdrawal 13 shall be completed as provided by this subsection. 14 3. The requirements of this section shall not 15 apply to indirect holdings of a scrutinized company. 16 The public fund shall, however, submit letters to 17 the managers of such investment funds containing 18 scrutinized companies requesting that they consider 19 removing such companies from the fund or create a 20 similar fund with indirect holdings devoid of such 21 companies. If the manager creates a similar fund 22 with indirect holdings devoid of such companies, the 23 public fund is encouraged to replace all applicable 24 investments with investments in the similar fund 25 consistent with prudent investing standards. 26 Sec. ___. NEW SECTION . 12K.5 Reports. 27 1. Scrutinized companies list. Each public fund 28 shall, within thirty days after the scrutinized 29 companies list is created or updated as required by 30 section 12K.3, make the list available to the public. 31 2. Annual report. On October 1, 2017, and each 32 October 1 thereafter, each public fund shall make 33 available to the public, and file with the general 34 assembly, an annual report covering the prior fiscal 35 -4- HF2331.2658 (2) 86 ec/sc 4/ 5
year that includes the following: 1 a. The scrutinized companies list as of the end of 2 the fiscal year. 3 b. A summary of all written notices sent as 4 required by section 12K.3 during the fiscal year. 5 c. All investments sold, redeemed, divested, or 6 withdrawn as provided in section 12K.4 during the 7 fiscal year. 8 Sec. ___. NEW SECTION . 12K.6 Legal obligations —— 9 immunity. 10 With respect to actions taken in compliance with 11 this chapter, including all good-faith determinations 12 regarding companies as required by this chapter, 13 the public fund shall be immune from any liability 14 and exempt from any conflicting statutory or common 15 law obligations, including any such obligations 16 in respect to choice of asset managers, investment 17 funds, or investments for the public fund’s securities 18 portfolios. > 19 2. Title page, line 2, after < Israel > by inserting 20 < and fossil fuel companies > 21 3. By renumbering as necessary. 22 ______________________________ KELLEY of Jasper -5- HF2331.2658 (2) 86 ec/sc 5/ 5 #2. #3.