House File 653 H-1088 Amend House File 653 as follows: 1 1. By striking everything after the enacting clause and 2 inserting: 3 < Section 1. Section 12.8, subsection 1, Code 2023, is 4 amended to read as follows: 5 1. The treasurer of state shall invest or deposit, subject 6 to chapters 12F , 12H , and 12J , and 12K and as provided by law, 7 any of the public funds not currently needed for operating 8 expenses and shall do so upon receipt of monthly notice from 9 the director of the department of administrative services of 10 the amount not so needed. In the event of loss on redemption 11 or sale of securities invested as prescribed by law, and if 12 the transaction is reported to the executive council, neither 13 the treasurer nor director of the department of administrative 14 services is personally liable but the loss shall be charged 15 against the funds which would have received the profits or 16 interest of the investment and there is appropriated from the 17 funds the amount so required. 18 Sec. 2. NEW SECTION . 12K.1 Legislative findings and intent. 19 The general assembly is deeply concerned over the increased 20 prevalence of investing based on social and environmental 21 factors, known as environmental, social, and governance 22 investing, rather than pecuniary factors. Therefore, the 23 general assembly intends to ensure that state funds and funds 24 administered by the state, including public employee retirement 25 funds, are protected from political influence detrimental to 26 the financial health of the state and its citizens and promote 27 the general assembly’s goal of protecting free enterprise. 28 Sec. 3. NEW SECTION . 12K.2 Definitions. 29 As used in this chapter, unless the context otherwise 30 requires: 31 1. “Boycott of certain companies” means, except as otherwise 32 provided in chapters 12F, 12H, and 12J or without a reasonable 33 business purpose, refusal to invest in a company, termination 34 of business activities with a company, or another action that 35 -1- HF 653.978 (3) 90 (amending this HF 653 to CONFORM to SF 507) ec/rn 1/ 8 #1.
is intended to penalize, inflict economic harm on, or limit 1 commercial relations with a company because the company does 2 any of the following: 3 a. Engages in, or does business with a company that engages 4 in, the exploration, production, utilization, transportation, 5 or sale of fossil fuel-based energy, timber, mining, or 6 production agriculture. 7 b. Engages in, or does business with a company that engages 8 in, the manufacturing, distribution, sale, import, export, or 9 lawful use of firearms, firearm parts, firearm accessories, or 10 ammunition. 11 2. “Company” means any business or business entity, bank, 12 national banking association, nonbank financial institution, 13 financial services company, investment company, bank and trust 14 company, trust company, savings and loan association, building 15 and loan association, mutual savings bank, credit union, or 16 savings bank, including a wholly owned subsidiary, majority- 17 owned subsidiary, parent company, or affiliate of such business 18 or business entity, that exists for the purpose of making a 19 profit. 20 3. “Nonpecuniary social investment” means, except as 21 otherwise provided in this chapter and chapters 12F, 12H, 22 and 12J, investment or commitment of public funds to further 23 environmental, social, governance, political, or ideological 24 interests and for the purpose of obtaining an effect other than 25 a maximized return to the public fund without a reasonable 26 business purpose. 27 4. “Public entity” means the state, political subdivisions 28 of the state, public school corporations, and all public 29 officers, boards, commissions, departments, agencies, and 30 authorities empowered by law to enter into public contracts for 31 the expenditure of public funds, including the state board of 32 regents and institutions under the control of the state board 33 of regents. “Public entity” includes a public fund. 34 5. “Public fund” means the treasurer of state, the state 35 -2- HF 653.978 (3) 90 (amending this HF 653 to CONFORM to SF 507) ec/rn 2/ 8
board of regents, the public safety peace officers’ retirement 1 system created in chapter 97A, the Iowa public employees’ 2 retirement system created in chapter 97B, the statewide fire 3 and police retirement system created in chapter 411, or the 4 judicial retirement system created in chapter 602. 5 6. “Reasonable business purpose” means includes any purpose 6 directly related to any of the following: 7 a. Promoting the financial success or stability of a 8 company. 9 b. Mitigating risk to a company. 10 c. Complying with legal or regulatory requirements. 11 d. Limiting liability of a company. 12 7. “Scrutinized company” means any company that engages in 13 nonpecuniary social investment on behalf of a public entity or 14 a boycott of certain companies on behalf of a public entity. 15 8. “Scrutinized company list” means the list of scrutinized 16 companies prepared, maintained, and published by a public fund 17 pursuant to section 12K.3. 18 Sec. 4. NEW SECTION . 12K.3 Identification of scrutinized 19 companies —— notice. 20 1. a. By March 1, 2024, a public fund shall make its best 21 efforts to identify or have identified any scrutinized company 22 that the public fund has entered into a contract with to 23 provide investment or management of securities services for the 24 public fund. The public fund shall create and make available 25 to the public a scrutinized company list for that public fund. 26 The public fund shall review on an annual basis and update, if 27 necessary, the scrutinized company list. 28 b. In making its best efforts to identify or have identified 29 a scrutinized company, the public fund shall consider and may 30 rely upon any of the following information: 31 (1) A company’s certification that it is not engaged 32 in nonpecuniary social investment or a boycott of certain 33 companies. 34 (2) Publicly available information made by the company, 35 -3- HF 653.978 (3) 90 (amending this HF 653 to CONFORM to SF 507) ec/rn 3/ 8
including information that may be provided by nonprofit 1 organizations, research firms, and international organizations, 2 or publicly available statements by a member of a company’s 3 governing body, an executive director of a company, or any 4 other officer or employee of the company with the authority to 5 issue policy statements on behalf of the company. 6 (3) Information published by the state or federal 7 government. 8 c. The Iowa public employees’ retirement system, acting 9 on behalf of the system and other public funds subject to 10 this section, may develop and issue a request for proposals 11 for third-party services to complete the identification of 12 any scrutinized company and the compilation of a scrutinized 13 company list. The Iowa public employees’ retirement system 14 shall consult with all other public funds on the development of 15 the request for proposals. However, selection of a successful 16 proposal and the final scope of services to be provided shall 17 be determined only by those public funds that have agreed to 18 utilize the third-party services. If more than one public fund 19 decides to utilize the third-party services, the participating 20 public funds shall equally share the costs of such services. 21 2. a. For each company on the scrutinized company list, the 22 public fund shall send or have sent a written notice informing 23 the company of its status as a scrutinized company and that 24 it may become subject to contract termination with the public 25 fund. 26 b. If, following notice as provided by this section, a 27 company ceases activity that designates it as a scrutinized 28 company and submits a written statement to the public fund that 29 it has ceased engaging in nonpecuniary social investment or a 30 boycott of certain companies, the company shall be removed from 31 the scrutinized company list. 32 Sec. 5. NEW SECTION . 12K.4 Public funds —— contract and 33 investment requirements. 34 1. A public fund shall not enter into a contract with a 35 -4- HF 653.978 (3) 90 (amending this HF 653 to CONFORM to SF 507) ec/rn 4/ 8
company to provide investment or management of securities 1 services to the public fund so long as such company remains on 2 the public fund’s scrutinized company list as provided in this 3 chapter or if the company would engage in nonpecuniary social 4 investment or a boycott of certain companies on behalf of the 5 public fund. 6 2. a. In accordance with sound investment criteria and 7 consistent with fiduciary obligations, a public fund shall 8 terminate a contract to provide investment or management 9 of securities services with a company on the public fund’s 10 scrutinized company list, so long as the company remains on 11 that list, within eighteen months following the first written 12 notice sent to the scrutinized company as required by section 13 12K.3. 14 b. This subsection shall not be construed to require the 15 premature or otherwise imprudent termination of a contract, but 16 any termination of a contract shall be completed as provided 17 by this subsection. 18 Sec. 6. NEW SECTION . 12K.5 Reports. 19 1. Scrutinized companies list. Each public fund shall, 20 within thirty days after the scrutinized company list is 21 created or updated as required by section 12K.3, make the list 22 available to the public. 23 2. Annual report. On October 1, 2024, and each October 24 1 thereafter, each public fund shall make available to the 25 public, and file with the general assembly, an annual report 26 covering the prior fiscal year that includes the following: 27 a. The scrutinized company list as of the end of the fiscal 28 year. 29 b. A summary of all written notices sent as required by 30 section 12K.3 during the fiscal year. 31 c. All contracts terminated as provided in section 12K.4 32 during the fiscal year. 33 Sec. 7. NEW SECTION . 12K.6 Public entities —— contract 34 requirements. 35 -5- HF 653.978 (3) 90 (amending this HF 653 to CONFORM to SF 507) ec/rn 5/ 8
A public entity shall not enter into a contract of one 1 thousand dollars or more with a scrutinized company included on 2 a scrutinized company list created by a public fund pursuant to 3 section 12K.3 to provide investment or management securities 4 services in which any public funds are invested. 5 Sec. 8. NEW SECTION . 12K.7 Public funds —— legal 6 obligations. 7 1. With respect to actions taken in compliance with this 8 chapter, including all good-faith determinations regarding 9 companies as required by this chapter, the public fund shall 10 be immune from any liability and exempt from any conflicting 11 statutory or common law obligations, including any such 12 obligations in respect to choice of asset managers, investment 13 funds, or investments for the public fund’s securities 14 portfolios. 15 2. This chapter shall not limit the ability of a public fund 16 to terminate the contract of an investment manager or other 17 vendor at any time and for any reason in the exercise of the 18 public fund’s fiduciary duties. 19 Sec. 9. Section 35A.13, subsection 4, paragraph a, Code 20 2023, is amended to read as follows: 21 a. Notwithstanding subsection 5 , moneys in the fund, except 22 so much of the fund as may be necessary to be kept on hand 23 for the making of disbursements under this section , shall 24 be invested by the treasurer of state, in consultation with 25 the commission and the public retirement systems committee 26 established by section 97D.4 , in any investments authorized for 27 the Iowa public employees’ retirement system in section 97B.7A , 28 including common stock, and subject to the requirements of 29 chapters 12F , 12H , and 12J , and 12K, and the earnings therefrom 30 shall be credited to the fund. The treasurer of state may 31 execute contracts and agreements with investment advisors, 32 consultants, and investment management and benefit consultant 33 firms in the administration of investments of moneys in the 34 fund. 35 -6- HF 653.978 (3) 90 (amending this HF 653 to CONFORM to SF 507) ec/rn 6/ 8
Sec. 10. Section 97A.7, subsection 1, Code 2023, is amended 1 to read as follows: 2 1. The board of trustees shall be the trustees of the 3 retirement fund created by this chapter as provided in section 4 97A.8 and shall have full power to invest and reinvest funds 5 subject to the terms, conditions, limitations, and restrictions 6 imposed by subsection 2 and chapters 12F , 12H , and 12J , and 7 12K and subject to like terms, conditions, limitations, and 8 restrictions said trustees shall have full power to hold, 9 purchase, sell, assign, transfer, or dispose of any of the 10 securities and investments of the retirement fund which have 11 been invested, as well as of the proceeds of said investments 12 and any moneys belonging to the retirement fund. The board 13 of trustees may authorize the treasurer of state to exercise 14 any of the duties of this section . When so authorized the 15 treasurer of state shall report any transactions to the board 16 of trustees at its next monthly meeting. 17 Sec. 11. Section 97B.4, subsection 5, Code 2023, is amended 18 to read as follows: 19 5. Investments. The system, through the chief investment 20 officer, shall invest, subject to chapters 12F , 12H , and 12J , 21 and 12K and in accordance with the investment policy and 22 goal statement established by the board, the portion of the 23 retirement fund which, in the judgment of the system, is not 24 needed for current payment of benefits under this chapter 25 subject to the requirements of section 97B.7A . 26 Sec. 12. Section 262.14, unnumbered paragraph 1, Code 2023, 27 is amended to read as follows: 28 The board may invest funds belonging to the institutions, 29 subject to chapters 12F , 12H , and 12J , and 12K and the 30 following regulations: 31 Sec. 13. Section 411.7, subsection 1, Code 2023, is amended 32 to read as follows: 33 1. The board of trustees is the trustee of the fire 34 and police retirement fund created in section 411.8 and 35 -7- HF 653.978 (3) 90 (amending this HF 653 to CONFORM to SF 507) ec/rn 7/ 8
shall annually establish an investment policy to govern the 1 investment and reinvestment of the moneys in the fund, subject 2 to the terms, conditions, limitations, and restrictions 3 imposed by subsection 2 and chapters 12F , 12H , and 12J , and 4 12K . Subject to like terms, conditions, limitations, and 5 restrictions the system has full power to hold, purchase, sell, 6 assign, transfer, or dispose of any of the securities and 7 investments in which the fund has been invested, as well as of 8 the proceeds of the investments and any moneys belonging to the 9 fund. 10 Sec. 14. Section 602.9111, subsection 1, Code 2023, is 11 amended to read as follows: 12 1. So much of the judicial retirement fund as may not be 13 necessary to be kept on hand for the making of disbursements 14 under this article shall be invested by the treasurer of 15 state in any investments authorized for the Iowa public 16 employees’ retirement system in section 97B.7A and subject to 17 the requirements of chapters 12F , 12H , and 12J , and 12K, and 18 the earnings therefrom shall be credited to the fund. The 19 treasurer of state may execute contracts and agreements with 20 investment advisors, consultants, and investment management and 21 benefit consultant firms in the administration of the judicial 22 retirement fund. > 23 2. Title page, line 1, by striking < by public funds > 24 ______________________________ LUNDGREN of Dubuque -8- HF 653.978 (3) 90 (amending this HF 653 to CONFORM to SF 507) ec/rn 8/ 8 #2.